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  1. #1
    Join Date
    Apr 2020
    Posts
    1

    Default Confirming Anticipated Participation of Investors in My First Project

    Hello,

    I'm starting my own business. Following the "3f rule" (family, friends & fools), I decided to look for funding among my family members and friends. I want to ask them for confirmation of participation in my first project. The terms would be that the "friend" confirms that he/she will invest X amount in my project if and only if I find 100% of the required sum to initiate the project. The reason for such action is that I want to 1. validate the market and 2. address other relevant stakeholders and convince them by showing how much investment I can get.

    I'm looking for a way to express that anticipated participation so that it looks professional and trustworthy for the other stakeholders yet doesn't discourage my friends from participation. It should be safe for them ("I will not give him any money unless he really starts the project") and for me (I will be able to assume these people will indeed participate in the project when the time comes).

    Any suggestions are welcome!

  2. #2
    Join Date
    Mar 2013
    Posts
    17,783

    Default Re: Confirming Anticipated Participation of Investors in My First Project

    Are you in the US? The reason I ask is that "stakeholder" is not a term that is normally use in the US. If you are in the US, what state? State laws differ and there are federal laws to consider when it comes to investments.

    Nobody here is allowed to give specific legal advice on how to draw up documents. You'll have to hire a lawyer for that who can also tell you what else you'll need.

    Is this money you are looking for an outright gift, a loan that you intend to pay back, or an investment where the investor risks losing all his money if the business fails?

    I can tell you one thing, though, if you don't get the money now, when somebody commits to it, your chances are slim for getting it later.

    Example:

    Jack - Sounds like a great business opportunity. I'm in. When do you expect to start.
    Maciej_G - As soon as all my funding is in which I expect to have by June 1.
    Jack - Great, come see me on June 1 and I'll put up $1000.

    June 1:

    Jack - Sorry, old pal, I can't come up with that money anymore (uncertain economy, virus, job loss, new baby, new car, new house, kids' college, unforeseen medical, not so sure about your idea anymore,etc, etc, etc).

    You'll get many more like that and your business idea collapses like a house of cards.

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