Most startup companies receive the bulk of their seed capital from friends and family (F&F). The best way to make this type of funding work for you is to put all the risks and opportunities in front of your potential F&F investors and have them help you create a healthy, profitable business. Your friends and family may want to be passive, but if they request to be active, find a way to involve them that is beneficial to all, including the business. When your F&F investors participate actively in your business, consider incorporating the business with them as founding stockholders.
Marilyn Holt, CMC CEO Holt Capital Seattle