Your Buddy Wants You to Invest in His Business — 7 Questions to Ask Before Writing a Check

A business investment should spell out exactly what the investor receives, where the money goes, what can go wrong, and what happens next – Shutterstock

A friend asking for $10,000 to help launch a business sounds simple until the conversation moves from dinner to paperwork. Suddenly, the investment could involve ownership, a loan, convertible debt, or another security, and each structure can create very different rights and risks.

The friendship also changes the emotional math. Saying no to a stranger feels easy. Saying no to someone who has known you for years can feel like rejecting the person rather than declining the deal. That makes seven questions worth asking before writing a check.