Raising a Friends and Family Round (When Your Friends and Family Don’t Have Any Money)

Elevate Perspective

Raising a Friends and Family Round (When Your Friends and Family Don’t Have Any Money)

By Eric Steele, Entrepreneur-in-Residence, Southwest Indiana

Early on in the startup lifecycle, prior to having any customers or even a beta product, founders often find themselves in need of capital. Before approaching angel investors or venture investors, startup costs are typically either self-funded or raised from what is known as “friends and family money”. But what do you do if you or your friends and family are not in a position to help out financially? Below are a few alternative financing options to explore when starting your high-growth, high-potential business.

Pitch Competitions

There are many benefits to participating in pitch competitions. First, the prizes for winners can range from cash to in-kind services such as legal or technical assistance. Second, the competition forces you to practice pitching your idea. Whether it is a quick two-minute pitch or a longer presentation, the more you practice, the more prepared you will be when talking to investors. Finally, you never know what connections you can make from those watching the competition. There are often angel investors, customers, or key resources in the audience that can provide valuable connections or advice.


Similar to pitch competitions, the greatest benefits to accelerators and incubators are the connections you will make and the practice you gain by pitching and articulating your idea. That said, participating in these programs oftentimes come with cash investment or a chance to pitch investors during a final “demo day.”


If your idea and funding needs revolve around scientific research and is something that is patentable, then the SBIR/STTR program could be a great way to raise your first money. This funding is typically used for research and development and is non-dilutive (you don’t have to give away company equity when you accept the funding).

Local Angel Investors

While you might be too early for some angel investors, some communities have individuals that are interested in supporting local entrepreneurs and will invest in ideas earlier than traditional angels.  These individuals can be difficult to find and identify, but attending networking events, pitch competitions, and telling your story to as many people as possible can help get you connected.

Industry Leaders

Similar to local angels, connecting with industry leaders in the field or industry you are addressing can open up dialogue before traditional angel investors would be interested. Good candidates for this type of investment are past CEOs or leaders in the industry you are targeting that have exited their current role.  Not only do these individuals have capital from their prior exit, but they also have industry experience that will get them excited about your solution. These relationships are most effective if approached initially from an advisory relationship that may turn into an investment over time.

Regional Investment and Loan Programs

Many regions and cities have investment and loan programs targeting startups within their specific regions. Loan programs can often be identified with the help of your local Small Business Development Center (SBDC) representative. In some regions throughout Indiana, Elevate Ventures offers early-stage investment through the Community Ideation Fund.

Many of the above examples are not necessarily direct investment options, rather they are opportunities to build your network and meet individuals or organizations that may help, financially or otherwise, your business in the future. First-time entrepreneurs often start with a limited network but by reaching out to experienced individuals and support organizations you will not only access valuable resources, but you will build your network for future fundraising rounds.