Should we invest in a friend's company?

Primrose

My personal reaction is that to mix business with friendship can be too risky, especially if your friend is under the impression that you're going to be a sleeping partner and not want to be involved in the business. If you can't afford to lose this money, don't invest. It will irreparably damage your friendship if things go pear shaped. If you don't have a job at the moment, you may well need this money in the immediate future for other needs. If you DO decide to invest, get a legal written agreement drawn up so that both of you know exactly where you stand, and on what basis you can withdraw your money if you need to. Don't trust to a verbal agreement, however good your friendship.

barak

elljay wrote: »

Thanks everyone, as you say, pretty unanimous, though I do feel pretty sorry for the friend trying to make a go of his business.....

Still not sure, but your advice will help me to come to an informed decision.

elljay - Just don't do it! Presumably no bank will lend him the money, so nor should you!

richardvc

elljay wrote: »

Good morning - I'm not sure which board to put this in but hopefully someone will be able to advise. A couple of friends and I have recently been made redundant and are frantically jobhunting as there wasn't much of a payout. Another friend has asked if we might be interested in investing a couple of thousand in a business he's just starting. I feel it might be risky given that a previous company went bankrupt but it could be different now if we invested and also insisted on being hands on,though I'm not sure how much control we could actually have. I also know he's learned a few lessons but I still feel he thinks we'll hand over the money and then stay in the background and let him get on with it, however it's my money and I want to know what's happening with it.

What sort of things should we be thinking of, what sort of documents should we insist on having, what sort of safeguards can be put in place - I really can't afford to lose the money.

If we go with it, would we then be self-employed directors even though working for the company and therefore also employees? Sorry, maybe that part is for the employment board.

As you can see, I'm very confused - help please

Ell

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