A family member wants to invest $25k into our startup, what do we do now?

Re:A family member wants to invest $25k into our startup, wh... by arockwell on Wednesday September 24, 2008 @02:05PM (#313832)

Just in case you hadn't seen them before YC offers some boilerplate legal documents for angel funding that might help get you started. You can find them at: http://www.ycombinator.com/seriesaa.html

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Re:A family member wants to invest $25k into our startup, wh... by tptacek on Wednesday September 24, 2008 @03:27PM (#313946)

CAREFUL.

See: http://www.law.uc.edu/CCL/33ActRls/rule501.html

In the WSGR Stock Purchase Agreement template you've linked to, the investor warrants that they are an "accredited investor", which long story short means they're a millionaire or have roughly a millionaire's typical annual income.

So far as I know, and having been involved in one minor legal spat involving accreditation (a former employer got bought by another private company, and a valuation negotiation pivoted on the fact that the new company couldn't simply issue me stock), you can't simply give someone 25k and "be an angel investor". There's more to it than that.

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Re:A family member wants to invest $25k into our startup, wh... by arockwell on Wednesday September 24, 2008 @03:40PM (#313966)

Thanks for adding that. I really wish the YC documents came with some explanation or overview of what the terms mean. I really don't understand them very well.

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Re:A family member wants to invest $25k into our startup, wh... by tptacek on Wednesday September 24, 2008 @05:07PM (#314080)

I think these docs are intended as a way to reduce your legal hassles, but are misinterpreted as a way to eliminate lawyers. To take an investment, you need a lawyer.

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