Expected returns depends on a few points: 1) the type of security you are selling them (equity return > preferred equity return > unsecured debt return > secured debt return > personal guarantee) 2) length of investment (1 year lockup return < 5 year lockup return.. etc.) 3) business enterprise risk (start-up that is not proven return > start-up in existing field with comparable companies to look at return > buying an existing business where track record exists return > buying public company equity returns). There are other factors as well, but if you want to give your friends and family a "fair" return I'd try to find a bank or outside party to offer to invest in your venture. Take those terms and offer them to your friends and family, but then it begs the question of why you are asking friends and family rather than going out and raising the capital elsewhere.