It sounds like you don't want to be a VC, you want to be an angel. I'd suggest you look at an angel network in your ___location and go talk to them about what you are thinking of doing.
"I'd be funding friends, but I don't have a lot of time myself."
He wants to be part of a "friends and family" round or two. No harm in that-- but I think most of the questions you need to ask are best answered by a lawyer.
Can anything significant come of something like this, or is it way too small time? I'm just a normal working schmoe, so I can only afford to support someone's basic living requirements and simple hardware.
