The entrepreneurs, nowadays are increasingly relying on internet crowdfunding - the use of online platforms to raise money from multiple contributors.
Raising money from family and friends is a common and effective way for start-ups, says a statement sent by MediaOutReach.
It is reported that active global crowdfunding platforms generated more than US $34.4 billion in 2015.
The World Bank estimates that the crowdfunding industry will reach US $90 billion by 2020.
In terms of scale, crowdfunding has become a viable alternative to venture capital and angel investment.
For most entrepreneurs, seeking funding from family and friends is a popular and effective way to round up their initial capital for business, according to the statement.
It says the reason is simple, "(as) these are the people who are more likely than anyone else to believe in your ability and fund your dream."
However, questions have arisen whether there is any downside of this source of funding.
A study conducted by Assistant Professor Tingting Fan and Associate Professor Leilei Gao from Department of Marketing at the Chinese University of Hong Kong (CUHK) Business School, and their collaborator Yael Steinhart, Professor at Tel Aviv University in Israel, sheds some light on the subject.
The study aims to explore the role of friends and family contribution by considering consumers' reactions to potential 'seeding' behaviour at the early stage of a crowdfunding campaign launch.
After conducting five studies including a field study, the researchers have come up with multiple important findings.
Firstly, friends and family of entrepreneurs contributed more money in the early stage of a crowdfunding campaign as compared to strangers.
