Glossary · Ecosystem and support · Updated
Love money is money invested by the founder's circle: family, friends, people close to them. It is often a startup's very first financing, before any angel investor, and usually falls between €5,000 and €50,000.
Its role is to fund the period when no professional investor will step in: a few months to build a first prototype, register a trademark, or reach the first customers. At that stage the decision to invest rests on trust in the person, not on analysis of the business.
That is exactly what makes it delicate. Your family has neither the means to assess the risk nor the diversification that lets an angel lose nine times out of ten without consequence. One simple rule applies: accept only sums whose total loss would change nothing in that person's life, and say so explicitly before the money arrives.
Paperwork here is not excessive caution, it protects the relationship. A proper capital increase, with even a simple agreement, avoids misunderstandings about what each person owns and what happens at the next round. It is also what lets a professional investor inherit a readable cap table.
Example: a first love money round
Two founders raise from their circle to fund nine months of development.
| Total raised | €40,000 |
|---|---|
| Number of subscribers | 5 |
| Average cheque | €8,000 |
| Valuation used | €400,000 |
| Equity given up | 10% |
| Instrument | capital increase in ordinary shares |
| Formalities | shareholder meeting, amended articles, simple agreement |
| Possible tax relief for subscribers | subject to eligibility conditions |
Forty thousand euros at a €400,000 valuation costs 10% of the company. Setting the valuation too low here feels generous towards family, but creates an awkward precedent when discussing price at the next round.
The common mistake
Taking the money with nothing in writing, on the basis that between family it does not matter. The opposite is true: among family, a disagreement about what was agreed becomes impossible to arbitrate, and it resurfaces at the first professional round.
Frequently asked questions
How much can you raise in love money?+
Usually between €5,000 and €50,000 in total across a few people. Beyond that, structuring becomes pressing, and it is generally better to move to angel investors who understand the risk they are taking.
Do you need a shareholders' agreement for love money?+
Yes, even a simple one. It sets out what happens if someone wants to exit, how their shares are valued, and obliges them to follow a sale approved by the majority. Without it, five small holders can block a transaction fifteen years later.
Related terms
Prepare your raise with the right documents
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