How First-Time Founders Can Raise a Friends & Family Round (and the Questions Everyone Asks)
Most first-time founders hit the same moment: you’re ready to build, you need early capital, and the people most willing to bet on you are the ones who already know you best. A friends-and-family round is often the fastest way to get moving—but it’s also where misunderstandings about “accredited investors” and securities rules start to creep in.
This piece brings together the founder perspective from Anthony Domenici at Basecamp and legal insight from Roger Lee, an attorney at Stubbs Alderton with deep experience advising early-stage founders on fundraising, cap tables, and securities compliance.
Are friends and family required to be accredited investors?
No. You can take money from non-accredited investors — as long as you use the right legal exemption and handle the filings correctly. Most founders rely on Regulation D, Rule 506(b) because it allows up to 35 non-accredited investors and unlimited accredited ones, as long as you’re not publicly soliciting.
This is what makes early belief capital possible.
So what’s the catch?
When you include non-accredited investors, you take on more responsibility: more disclosures, more attention to state filings, and more diligence from future VCs who want to confirm everything was done by the book. It’s all manageable but it just requires intention.
Be transparent about the risks, too; acknowledge the potential for zero returns to build trust and protect those relationships.
What structure should founders use?
Most early rounds today use a SAFE. It’s clean, simple, and easy for non-professional investors to understand. Keep the terms standard. Keep the cap table tight. Protect relationships with clear documentation.
Convertible notes are another flexible option for this stage.
How much should I raise from friends and family?
Enough to hit a real proof point — not just a longer runway. Investors (including your next round) want to see progress tied to capital, not just capital burned. Typical targets fall between $50,000 and $500,000 to validate your idea and build an MVP.
A simple rule: Fewer investors, larger checks.
It keeps your cap table clean and reduces the administrative lift. Your future self (and your future VC) will thank you. Your future VCs will likely not be concerned that non-accredited investors are on the cap table if done with intention. A well-structured SAFE round with the right exemption and filings signals that you treat your friends and family like real investors, which is exactly what institutional capital wants to see.
Working with early‑stage teams, a pattern shows up fast: the founders who are most thoughtful about who they let onto the cap table have the least cleanup to do later. A small group of aligned, well‑informed friends and family, documented correctly, almost always beats a long list of small checks and individuals who might become difficult to keep track of.
The bottom line
You don’t need a roster of accredited investors to get started. You just need the right exemption, clean documents, and a thoughtful approach to who’s on your cap table.
When handled well, a friends-and-family round becomes the first step toward real scale — not a legal distraction. In the past few years, with pre-seed rounds professionalizing, this stage remains a trust-based launchpad for many potential unicorns.