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This article explores friendship within the entrepreneurial team with particular attention to its association with the team's behavior and the performance of the venture. Building on a foundation in the literatures on friendship, entrepreneurial teams, and strategic decisions, we propose 13 such relationships. Friendship facilitates the formation of management teams for new ventures, thereby improving their early performance. As the entrepreneurial team continues to function, friendship is conducive to decision-making processes that enhance the team's effectiveness in solving “wicked” problems and ultimately improve the venture's performance. Friendships, under different circumstances, may exert either positive or negative influences on turnover within the entrepreneurial team, and those influences may improve or impair the venture's performance. (At the same time, behavior within the team or events in the venture's development may affect friendships within the team.) Finally we develop and discuss several implications of our propositions for research and practice in entrepreneurship. We point out methodological considerations and directions for future research that would address these implications.