If you're never getting that money back, you might as well forgive them and forget it. Then at least you'd keep the friends.

It's never even about forgiving. I am not even angry at them. What happens is there is now suddenly a pedestal. No matter what we do, they know I gave them money. And I know they took it. The relationships don't remain the same anymore. It's weird.

I can see that. I would personally feel really bad if I lost all the money someone gave me. I'd always feel like I owe it back. Only exception would be at the very beginning, if that was a possibility that was acknowledged. However, I've noticed people who start these things are always very optimistic and probably don't seriously talk about this. To the previous poster, the only people who seem to handle this type of thing well are the extremely blunt people who are brutally honest and upfront about everything. There aren't many of them.

So did all of their startups fail?

Yeah, I wouldn't take money from people I wanted to stay friends with for this reason. It's just a bad idea. Introduce me to your acquaintances, sure, but lets stay friends.

I think this is the best advice. If you are going to fund a friend, give them a grant, no strings attached. They can return the favour if/when they have the means on their terms. Anything else is going to kill your friendship.

I did that.

It seemed obvious that it was a small gamble for me, a big gamble for my friend, but he was doing all the right things.

VCs don’t waste time with concerns over failed investments.

When you hand over some money, you are accepting the risk.

Including complications, which are likely. Treat the money like a gamble, not the friendship.

I was really glad I did. My friend created a successful business after working toward that with major ups & downs for over ten years.

Then he got cancer, and died a year later. I got no money back. But it was the best investment I ever made. His dream came true and that mattered so much to him. That he pulled it off, and his customers loved him and his business.

Don’t invest in a friend if the investment isn’t about genuinely helping them.

If you can afford to.

I have complicated feelings about this...... mostly reminding me to love. Thank you very much for sharing.

This. If you're funding your friends, think of yourself as a wealthy patron, not a lender or VC.

I had a friend who I lent money to his startup during Covid. He promised would be paid back within a year. Multiple hard conversations and it’s 4 years later and not one cent has been paid back to me. We currently don’t speak to each other. He’s delusional with his startup ideas, lives in lala fantasy land. Refuses to get a job and take any responsibility. He has zero track record of success, so it’s somewhat my fault for loaning him money.

It's your fault for lending money rather than asking for a % of profits (if any) like a normal early investor.

I tend to think having fiscal responsibility, morals and not being a shyster as the person who’s at fault.

Never loan money to friends is like “having money 101.” You can gift it or you can invest it with appropriate caveats given to any external investor, but never lend it.

This is common advice because it turns good relationships bad, that manifests as viewing former friends as shysters

Not everyone is like that, though some certainly are.

I've personally lent money to friends when they needed it, and been paid back once they got stuff sorted out.

Though in my younger days I was far less careful, so lending money did indeed go poorly.

I think the main issue, is that most people are reluctant to ask a friend for a loan because its considered in poor taste. If they are asking they either have no qalms about asking which is a red flag, or they are super desperate which probably means its unlikely they would have the ability to pay back.

Of course not everyone is like that. The issue is you don’t know who is ex ante, and often people aren’t that way ex ante, but one thing leads to another to a total breakdown in trust and respect.

Even in the case you describe, it’s much better to gift it: “if you want or are able to pay me back some day, go for it, but I don’t expect or need it.”

Never lend what you would not happily consider a gift.

Are any of your friends the type that is blunt/honest regardless of how things are going?

Personally I've found the problematic ones to be those who feel like they're obliged to act deferrentially once money is involved.

The blunt/honest ones that don't change their personality like that still seem ok.