Start-Up Financing from the Entrepreneur, Friends, and Family

A common myth is that entrepreneurial ventures usually start with money from outside sources such as banks and investors. Some potentially viable business opportunities never get off the ground because the entrepreneurs behind them mistakenly postpone start-up while waiting for outside funding that never materializes. The reality is that most entrepreneurial ventures rely on funding from the founders. And the most common source of outside finding is the entrepreneur’s family and friends. This chapter examines how entrepreneurs approach these sources of funding and the inherent potential pitfalls (Figure 10.1).