If you’re thinking about raising money, you may have some friends that want to co-invest.  Or, you may have a few folks that you want to recruit as investors.

A carefully chosen set of individual investors can be really helpful at various company stages.  They can be mini-advisors, providing help at key junctures:  funding, acquisition, strategy, etc.  Also, a commitment from “rock star” individuals can give you some additional credibility in raising the main funding round.

If you’re thinking about individuals, it’s important to build it into VC discussion from the beginning.  When you’re talking about the size of the round, you should say you intend carve out x% or $y of the Series A for individuals.  (Adding individuals at the end of the process is a pain.  I just went through this for a company I recently co-founded:  the resulting cap-table jostling is energy that should be spent elsewhere. )

Other things to keep in mind:

• $25k to $100k is a typical individual investor amount.
• Individuals may have to be accredited investors ($1m net worth).  Check with your attorney.
• Figure out how any pay-to-play provisions will apply to individuals.  Will they have to participate in future funding rounds?
• Your investor may take some time to figure out if s/he can invest.  Individuals at venture firms, law firms, and large companies may have to get approval that your company isn’t conflicted with their existing business.

Finally, get all of the details to the attorneys well before closing, including entity names (many individuals invest through an LLC or a estate planning trust).  Nothing kills the excitement of closing a round of funding like a holdup from a $25k investor.