Wefunder is one of the leading equity crowdfunding platforms on the market today. Equity crowdfunding platforms connect startup founders with both accredited and non-accredited investors to fundraise.
Over the past several years, we’ve seen a huge amount of equity crowdfunding platforms hit the market. As a startup founder, it can be difficult to determine which option is going to be the best fit for your needs. In this article, we’ll take an in-depth look at Wefunder and the features it offers for startups.
When raising money using Wefunder or any other equity crowdfunding platform, you will need to adhere to fundraising regulations in your country (ie. SEC regulations in the United States). This article is not intended as legal or financial advice, and we recommend you consult legal and financial professionals for advice as you raise capital for your startup, or if you are considering any investment.
Wefunder was founded in 2012 by Nick Tommarello and Greg Belote, two Y Combinator alumni with startup experience. Initially, the platform only accepted accredited investors due to legal restrictions at the time. They started allowing anyone to invest in 2016 when Regulation Crowdfunding became legal in the USA with the approval of the JOBS act.
As of early 2022, startups have raised over $463 million on Wefunder, which has led to $5 billion in follow-on investing. Wefunder boasts a success rate of 75 percent for startups that use their platform – which is particularly impressive given that they do not curate their platform. They also continue to work with Y Combinator to offer even more opportunities for growing businesses.
Wefunder provides opportunities for companies in a wide variety of industries. Some of their most interesting success stories include Modern Times, a beer and coffee company, Meow Wolf, an entertainment venue and art installation developer, and Zenefits, an HR software program.
The “Community Round”
Wefunder recently introduced a new concept in equity crowdfunding – the Community Round. Wefunder believes that private companies should give their customers, fans, users and followers an opportunity to share their success by investing in the company’s equity. It opens a broader scope for equity crowdfunding, and is intended to open the door to later stage private companies to open their doors to equity crowdfunding and to retail investors.
They are urging retail investors to petition their favorite private companies to give them access to their equity via a community round. Examples of private companies that Wefunder would like to see opening a community round include SpaceX, Reddit, Stripe and many more. If Wefunder succeeds in creating a movement in this direction, it could bring a lot of new investors into equity crowdfunding and open new investment opportunities for retail investors.
Getting Started With Wefunder
Because Wefunder is not a curated platform, any startup can launch a campaign, regardless of how much experience you have or what industry you are in. However, Wefunder does require working knowledge of how equity crowdfunding campaigns work and the regulations you’ll need to adhere to. Wefunder also currently only accepts companies based in the United States, although they attract investors from all over the world. But European startups should pay attention too – Wefunder recently announced plans to expand their operations to Europe and accept EU based startups in the near future.
To get started on Wefunder, you will need to create your pitch and provide important financial information about your business. Wefunder also encourages startups to promote their campaign to existing customers, colleagues, friends, and family, as most of the startups on their platform bring in a significant portion of investors on their own. You will also need to find a lead investor to act on behalf of Wefunder investors moving forward. Wefunder will need to approve your lead investor before you can get started.
From there, Wefunder helps startups refine their pitches and handle important paperwork and contracts for a Reg. CF campaign. Wefunder then promotes the campaign on their website and manages investor transactions. At the end of the funding round, they generate and file your Form C with the SEC, aggregating the crowdfunding investments into one entity on your cap table. Additionally, their software allows startups to easily communicate with their investors after the funding round has ended, setting you up for future success. You will need to continue providing annual reports to your investors after the crowdfunding campaign has ended.
Who Invests On Wefunder?
Wefunder currently has a platform of over 900,000 investors from all over the world. Wefunder markets their platform to ambitious investors who want to take a risk on growing startups but don’t have accredited investor status yet. However, there are also many accredited investors who use Wefunder to find their next big project.
Wefunder allows startups to choose their minimum investment amount, so you can decide what type of investors you want to target. The lowest investment amount available is $100. However, many startups set their minimum investment higher in order to target accredited investors and other experienced investors.
Wefunder Campaigns and Marketing
When you launch your Wefunder campaign, you’ll need to create a detailed investor pitch, fit for the requirements of the platform. This pitch will be featured on the Wefunder website and should be designed to attract exciting new investors. This includes information about the products and services your business offers and how that fits into the existing market, as well as information about your team, your facilities, and your sales so far. Investors want to see that your business already has a reliable track record.
Wefunder provides plenty of support for startups to create refined and compelling pitches. Startups can upload photos, graphics, and videos to make their pitches vibrant and eye-catching. Their team will also consult with you as you develop your pitch to increase your chances of resonating with their community of investors. After your campaign is over, Wefunder alumni can join the XX, which is a community of successful startup founders. The XX offers networking events, mentorship, and ongoing fundraising support for members.
Wefunder only charges fees for startups if their fundraising campaigns are successful. If your campaign does not succeed, you will not pay any fees. Wefunder makes a significant portion of its money from the 3.5% service fee they charge investors, which allows them to offer this investment structure to startups.
For Reg. CF campaigns, at the time of writing, Wefunder charges a flat fee of 7.5% of your total fundraising amount. For Reg. A+ campaigns, Wefunder currently charges a flat fee of $375k. These fees are designed to cover the brokerage costs associated with your campaigns.
How Does Wefunder Compare to StartEngine and Republic?
When looking for equity crowdfunding platforms for your startup, StartEngine and Republic are two platforms that you may be considering in addition to Wefunder. All three platforms are viable options for growing startups that need to fundraise.
The biggest difference between these platforms is that StartEngine and Republic are both curated platforms, while Wefunder is not. This means that StartEngine and Republic only accept a small percentage of startups that apply, while Wefunder is open to all startups that meet their basic requirements.
How to review the leading equity crowdfunding platforms:
To review some of the leading equity crowdfunding platforms worldwide, go over to CrowdFunding.Guide (CFG). CrowdFunding.Guide has reviews of the top platforms, in a way that is easy to understand and compare. You’ll also find discounts and special offers for startup founders seeking capital and connect with investors.
Overall, Wefunder is a reputable equity crowdfunding platform for startups. They have an excellent success rate and a large active user base. They offer robust legal support and pitch development, and their platform streamlines the crowdfunding process so you can access your funds quicker and stay in communication with investors.