If a friend or family member is starting a venture and asks you to invest, sift out the personal feelings and approach it as a business decision. Make sure the paperwork is in order and don’t rely on verbal promises. Mei, 41, marketing consultant shares her story an investment that went sour because she went with her feelings ,and not her business acumen.
My fellow Singaporean friend and I were approached by two ladies to invest in their seven-month old Japanese-French patisserie in Shanghai last year. The patisserie was owned, operated and managed by an Australian Singapore-Chinese lady named J, and her Taiwan-Chinese partner, who was also the pastry chef. As they are both from well-to-do families, andJ is the daughter of a friend, we felt ready to invest as they seemed to have a good business plan. The two ladies were passionate and eager to strike out on their own in a foreign country, and most importantly, their desserts literally melt in your mouth.
So we agreed verbally to invest over S$120,000 for a stake in the business. A month went by and there was no update on the delivery of the promised legal shareholder’s contract. When we asked to see the latest profit and loss statement, the two ladies said they were swamped as it was the peak season and they asked for more time. We backed off as we had complete trust in our friend’s daughter, and didn’t want to stress her out.
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