Raising Your Friends and Family Round: A Practical Guide for First-Time Founders

For many first-time founders, the friends and family round is the hardest money you will ever raise. Not because the numbers are big, but because the relationships are close. You are not pitching strangers in a boardroom. You are asking people who already know and trust you to back an idea that is still forming, and to take a real risk alongside you.

In a recent Canopy webinar, we unpacked how to approach a friends and family round with clarity, honesty, and structure, so that it supports your journey rather than creating pressure or regret later. The conversation was led by Stewart Noakes, joined by Matt Ville and Rachel Sestini, and focused on how founders can raise early capital responsibly while laying foundations for future investment.

Why friends and family rounds matter

Between bootstrapping and institutional investment sits an awkward gap. You may have no product, no customers, and no traction yet, but you need time to explore whether your idea can work. Friends and family rounds exist to buy that time.

They are rarely about perfection. They are about belief. At this stage, people are backing you as much as the idea. That is why it is essential to be open about the risks. Statistically, most startups fail at this point, even when the founder is capable and committed. Setting that expectation early protects both the relationship and your integrity as a founder.

Framing the story investors need to hear

Even at this early stage, investors, including friends and family, instinctively look through three lenses: viability, feasibility, and desirability.

Viability asks whether this could ever become a real business. Are there customers with a genuine problem? Are they willing to pay? Do the numbers work at a basic level, even if they are early and imperfect? This is not about building a unicorn; it is about showing that the business can stand on its own feet over time.

Feasibility is about whether this can actually be built, and whether you are the right person or team to build it. From a technology perspective, this means understanding what is possible today, what is uncertain, and how you plan to de-risk those unknowns. It also means being honest about your own capabilities and where you need support, whether that is through co-founders, advisors, or tools.

Desirability focuses on the customer. Have you spoken to the people you believe you are building for? Have you tested the pain point, even in simple ways? Early landing pages, interviews, prototypes, or no-code MVPs all help demonstrate that this problem matters enough for someone to engage with you.

Your friends and family round does not require a perfect pitch deck, but it does require a clear narrative across these three areas.

Using the UK system to reduce risk

One advantage for UK-based founders is the Seed Enterprise Investment Scheme (SEIS). SEIS allows individual investors to claim significant tax relief on early-stage investments, dramatically reducing their downside risk. With advance assurance from HMRC, you can tell potential investors up front that their investment qualifies, which often makes the decision easier.

SEIS does not remove risk, but it does change the conversation. It shows that you have done your homework, and it reassures investors that the government recognises and supports this stage of entrepreneurship.

Being responsible with relationships

A critical principle discussed in the webinar was affordability. Never ask someone to invest money they cannot afford to lose. This is not just ethical; it is practical. Pressure damages trust, and trust is far more valuable than any cheque.

The best friends and family rounds are collaborative. Conversations often generate feedback that strengthens your idea, highlights blind spots, and improves your plan. Even a “not yet” can move you forward if you treat it as learning rather than rejection.

A final word for founders

Raising a friends and family round is not always easy. Many talented founders do not have access to wealthy networks, which is why Canopy continues to explore alternative funding models and community-backed solutions. What matters most is that you approach this stage with honesty, structure, and respect for the people backing you.

If you are preparing for a friends and family round, or feeling stuck in the middle between bootstrapping and institutional capital, support makes a difference.

Call to action:
If you would like support with your own friends and family round, get in touch. You can connect directly with Stewart Noakes on LinkedIn (https://www.linkedin.com/in/stewartnoakes/), or reach out to Rachel Sestini (https://www.linkedin.com/in/rachelsestini/) or Matt Ville (https://www.linkedin.com/in/matthew-ville/) for practical guidance.

You can also explore our ideation and incubation programs at https://www.canopy.community/ 

Watch the full webinar here https://www.youtube.com/live/gg9MDUltya4?si=UzcGaAarjc6DJpR0