Friends and Family Round
Private Equity glossary · Private Equity Fundamentals
Definition
Earliest equity financing round, typically from personal contacts at favorable terms before institutional capital.
Friends and Family Round in plain English
When you're starting a company and no professional investor will touch you yet — you have nothing but an idea and maybe a prototype — the first outside money usually comes from the people who believe in YOU rather than the business: your parents, your uncle, your college roommate. That's the 'friends and family round.' Because these people are betting on you personally, they typically hand over cash on generous terms (a low price, few strings attached) that a hard-nosed investment fund would never offer. It's the very first rung on the fundraising ladder, before any 'institutional' (professional firm) money arrives.
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