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The Right Way to Ask Your Parents to Finance Your Business

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This story appears in the November 2013 issue of Entrepreneur. Subscribe »

Alex Genadinik, 33, borrowed $20,000 from his mom last year to launch Problemio, a startup that makes mobile apps for small businesses. Carlo Cisco, 26, has taken $150,000 in convertible-note investments from his relatives since 2012 to expand Select, his New York City dining, travel and entertainment discount club. And over the past five years, Andrew Angus, 34, has borrowed from his mom $500,000 (half her net worth) to keep up with the exponential growth of Switch Video, his animated-video production company.

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Family Money
Pros and Cons

Positive

Highly likely to say yes
Better financing and equity terms
Faster access to cash

Negative

Parents meddling in the business
Smirks fromindustry insiders
Lifetime of guilt if startup tanks

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