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Friends and family are typically investing to support someone they love, like, or admire—not to make a lot of money. Lew Cirne, whom we will study in Chapter 10, raised $100,000 in seed money for his startup from his family and friends. “They didn’t understand any of it,” he explained, “but they were willing to bet on me.” While such faith grants the founders a certain freedom from the demands and scrutiny that would come with professional investors, it also introduces a much more extreme risk if the startup fails, as discussed below.
The Founder's Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup
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