Friends & family round — do I need a formal SAFE or is a note okay?

Getting $50K total from family (uncle + two cousins). They don't care about terms, they just want to "help me out." One cousin literally said "just pay me back when you can."

Do I need formal legal docs or can I just keep it casual since it's family?

formal docs. 100%. my startup died and I had to tell my uncle he wasn't getting his $25K back. nearly broke the family. having a SAFE would've made it clear from the start that this was high-risk equity, not a loan.

seconding this. the formality protects the RELATIONSHIP more than the money. when cousin says "pay me back when you can" that becomes "so when are you paying me back?" after 18 months. a SAFE makes it clear: they get equity if you succeed, nothing if you fail.

Use a SAFE even for family. Reasons: (1) Sets clear expectations about risk, (2) Keeps your cap table clean for future investors, (3) Documents that this was an investment not a gift (tax implications), (4) Protects you from securities law issues.

$50K from 3 people is small enough that you're likely exempt from registration, but you still want proper accredited investor questionnaires or a Reg D safe harbor just to be safe.

give them a sweetheart deal though since they're taking on huge risk backing you before anyone else. low cap, maybe even a discount. my family got $2M cap when my seed was at $6M - they deserved it

What cap should I give family? I have no idea what my company is worth right now lol

for friends and family round with no real company yet, $1-2M cap is common. they're basically betting on you as a person. if you raise a proper seed later at $5M+ they get a nice multiple on their trust in you

Don't overthink the cap for $50K. At a $2M cap they'd own 2.5% when converted. That's fair for family risk. More importantly, HAVE THE CONVERSATION with them. Explain: "This is high risk. You could lose all $50K. Is that okay?" Get it in writing that they understand. Worth more than any legal doc.

Had the conversation with all three. My uncle actually said "I know it might fail, I've lost more in the stock market." Going with $2M cap SAFE. Thanks for talking me out of doing it casually - would've been a mess later.