Raising money from the “rich uncle”

I’m trying to raise a friends and family round to support a pre-revenue startup that is showing significant traffic in several areas, including development, pre-orders and partnerships. We’ve done a lot of work and we do see a clear path to success, but we’re ready to expand the team and kick into high gear.

Everyone is working for equity because it’s something that we all passionately believe in and are wiling to sacrifice for. But, we have almost no money to go on and without salaries, that fire only burns for so long.

I’ve had about 5 emails with my uncle, who is a pretty successful business man himself and has made several alternative investments into clubs and real estate, among others. We don’t really have much of a relationship, but it’s not like we’re on bad terms either.

I’ve made the pitch telling him about the business and its potential, and while it’s admittedly a bit wordy and maybe too emotionally based (i’ve just had a baby that finally carries on our family name), it’s overall a pretty well put together pitch. There is style, substance, facts and details to paint a rather strong picture. That said, he’s been barely responsive.

His last email told me to “drop the sales pitch”, that he doesnt have time for a phone call and to just send over the specific investment request by email and he’ll let me know if he’s interested.

My pride is telling me to just say, fuck him, to prove I don’t need him. But, I really am in a tough spot financially and I have to think what’s best for the business and my family.

I don’t want to be desperate and weak, but I wanna get that money. How should I proceed to better portray myself as someone worthy of his time and investment?


  • Image a friend came to you with your exact question. What advice would you give him or her? Framing your situation that way might help you assess things less emotionally.

  • Why don’t you just email him the specific investment request, like he asked for?
    Sorry if that’s the obvious answer… but some people legitimately are busy, and it sounds like he may be more of a term-oriented investor than anything, and is past concept because you are family.

    Probably not the best investor for you in any case, though.

  • 1. No matter whom you raise cash from it is not to much to ask to have it on a paper. Sounds like he wants an exec summary to see if he is interested (rather than reading a bloated business plan).

    2. This will probably be your best shot of getting money in fast as you are running out of cash and need to feed a family.

    3. Don’t let your pride get in the way as you have little cash on hand and more importantly you have people working for equity at this stage and are relying on you to deliver.

    4. This will be good practice before meeting external investors to get the kinks ironed out in your approach.

    5. Keep emotions out of it (it is very hard when you are passionate). Keep everything to the point and be razor sharp with your focus on benefits of the business and what he will get in return on his investment.

    Ok, the next bridge to cross; is he right for your business (know’s your industry), does he know the risks, will he add value other than money(intro’s / advice)?

    Will you be able to look him in the eye at family gatherings through the tough times (there are always tough times)?

    At this stage I would not worry to much about looking weak. I would focus getting together your pitch, jump on AngelList (or others / friends / intros) and get a network together. For the next six months you need to hit the group running and get money in from the right people.

    Every second counts. Good Luck>

  • Do not bother. If he’s that cold to you now his attitude if he invests will only get worse. You need more than cash, you need real support from these investors at some level.

  • If you feel like your uncle is giving you the cold shoulder, try reversing the tables and looking at it from his perspective. I’m confident he wants you to succeed and probably wants to invest.

    If you were buying hard assets (like an office building) or starting to manufacture a product (like a bakery, soft drink etc) with a known market your uncle might have an easier time relating to your proposal.

    If, however, you’re relying on him to understand a business plan that involves a new internet application that will revolutionize the market, your uncle’s reluctance might stem from his previous investment losses with internet-based investments or lack of education and experience with your potential customer base.

    So, where do you go from here?

    Here are a few ideas that will allow you to vet your idea with objective, third party professional investors. If those sharks start circling the water, I think your uncle won’t hesitate to jump in and invest:

    1. Have you tried raising capital using crowd funding? I know there are various crowd funding sites that cater to specific sectors. Examples include “Our Crowd” and “Realty Mogul”.

    2. Have you pitched or shown your web site to an angel vc firm? If so, did you received their feedback?

    3. Have you tried to pitch your business plan to non-relatives who you trust (your family lawyer, accountant, business professor? They will give you the most objective answer. and will also critique your presentation with your success in mind.

    Take a look at this link https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&ved=0CCYQFjAA&url=http%3A%2F%2Fwww.ted.com%2Ftalks%2Fnancy_duarte_the_secret_structure_of_great_talks.html&ei=Bw0KU9ygNsqEoQT9joGgAg&usg=AFQjCNEryktmZp5CKqLPxqv9ykuSMtuewA&bvm=bv.61725948,d.cGU

    Personally, based on what I’ve read about your current home life, I suggest you wait a few months so your home life gets into a more predictable routine, use the current period of turmoil (and lack of sleep) trying to reach out to others for feedback and critique and continue to refine your presentation and idea. This brief break may allow you to see things from a different perspective and when things calm down you will be ready to blast off.

    Don’t give up. Just reconsider your uncle’s motives and try to understand things from his perspective and move on. Use this brief hiatus to create the necessary “work-life balance” you’re gong to need when you reach the launchpad.

    Good luck.

  • In the past, I’ve raised money from friends and family for startups, and I’m currently in the “rich uncle” category. My advice would be to do exactly what your uncle asks, plain and simple. You’re going to need to raise money from more people than just him. He wants to see a professional pitch that will work on other people. He may in fact have other people in mind, if the pitch is any good.

    Even when you’re dealing with close family, there are good reasons to handle f&f investment in a thoroughly professional way.

    I don’t want to be a troll here, but from your post, it sounds like you are not behaving maturely here. As an uncle, I would be concerned to give money to someone who thought like this, no matter what the idea was.

  • Sounds like s very direct request. I might imagine he perceives you as “beating around the bush” with your long winded “look what we can do pitch”.

    Since he’s family I’m also assuming you feel a greater sense of responsibility about fucking up if he lends you money. This therefore pushes you to be extra long winded in your novel of a disclosure about every detail of the business which I’m sure he probably is not too interested in.

    If he’s open to lending to you then there is an inherent form of trust already there. Just move past “your feelings ” and be direct with him as he is with you.

    He probably just wants to understand the numbers, see what it generates and decide if it’s a risk worth taking. (I’ve always heard you don’t lend money you’re not willing to lose).

    Hope you don’t take all this the wrong way, not trying to be a jerk, I’m just calling it like I see it.

    Also congrats on the baby, we just had one 1yr ago and I run my own company as well and it’s sometimes the only part of my day that’s enjoyable!

    Take care and good luck.

  • Here is the thing- a start up is a high risk investment and doing a “friends and family” round is pretty dangerous to relationships considering that most start ups fail.

    If your uncle is being cold, respond with a solid one pager or deck and then leave it at that. He’s probably willing to invest if it makes sense to him on the bottom line, but not to help you out to make your dreams come true.

    You don’t want to be the guy that takes family money and loses it.

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