05/21/2012 12:05 pm ET

The Early Investors Behind Big Startups

Where do start-ups get the money to start up? Friends, family and fools.

It's an old joke, but it neatly sums up the conventional wisdom about the risks of investing in a loved one's business. Not only do you stand to lose your money, you could lose the relationship if the company goes belly-up, or even if it just goes through the regular stresses of getting a venture off the ground.

The conventional wisdom has a lot of truth in it, as countless failed businesses—and relationships—will show. But things don't always end in disaster. There are rare cases that pay off for everyone—even spectacularly.

In fact, some of the biggest small-business success stories started with a friend or relative taking a big gamble on a loved one's business that looked like a losing proposition. Their tales offer insight and hope for those who are about to write a big check, or ask for one.

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