It is common and standard for "friends and family" to invest in early-stage UK companies and startup and it is a common way for a company to receive investment and capital at an early-stage.
Whilst investments from "friends and family" can be a useful source of early funds and comes with relatively standard terms, it can present other issues to be conscious of. If the company is not growing as planned, you may feel added pressure from the responsibility that your friends' and family's investments are at stake. Although institutional investors, who have a portfolio of companies, can absorb the risk of potentially losing their investment, this is unlikely to be the case for your family and friends. Additionally, family and friends may become too involved in the running of your company due to their personal relationships with you, which could lead to tension.
It is essential that appropriate legal paperwork is drawn up in respect of any investment, regardless of whether the investor is one of your family members, a friend or an institutional investor. The implementation of suitable legal documents will ensure that all parties are agreed on the terms of any investment, which will help to reduce the risk of any animosity in a scenario where a company is unsuccessful.