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In the past couple of years, Wefunder has had higher returns than the top quarter of venture capital firms, and they believed it’s not just about the financial return; it’s about impact. The more founders that can ‘take their shot’, the stronger America is.
In this article, we are going to be reviewing a public benefit corporation with a real mission; A mission to fix capitalism and help entrepreneurs raise the startups of their dreams through regulation crowdfunding.
At the same time, giving their fans the opportunity to invest in startups they love and just be part of their journey!
So, if you’re one of those business owners who want to raise funds for their valuable startups or just a person who’s looking forward to investing in solid projects from as low as $100, this quick guide could be of great help as we are going to be answering some cool questions.
If you find this post inspiring and useful, share it with your friends, please! (Virtual high fives and awkward hugs to all my sharers out there)
Don’t Have Time To Read? WeFunder At A Glance
| Investor’s Fee | For payments made by bank ACH, wires, or checks, Wefunder charges investors a transaction fee of 2%, while for credit card payments a 3.5% fee. |
| Raising Capital Fee | For Reg CF, Wefunder charges 7.5% of the total fundraising, only when goals are met. For Reg A+, they charge a flat fee of $375K. |
| Minimum Investment | WeFunder helps everyone diversify their portfolio and invest as little as $100 in the startups they understand and love! |
| Maximum Investment | Accredited investors will be able to invest as much as they’d like in Reg CF offerings. For non-accredited investors with annual income below $107K, they can invest 5% of their income. |
| Minimum Amount Raised | $50,000! In a few cases, for idea-stage founders raising from their friends and family, we may lower it to $20,000. |
| Raising Capital Limit | If you’re raising with Regulation Crowdfunding, you can raise up to $5M. |
What Is WeFunder?
WeFunder is a public benefit corporation that aims to fix capitalism by helping business owners raise capital for their startups through an innovative and seamless crowdfunding process and allowing regular individuals to invest in the early stage of those startups and earn a return, from as low as $100.
In other words, WeFunder is a platform that helps people grow by either allowing them to get the most out of their ideas and turn them into a reality, or help them get the most out of their hard-earned money and invest it into something that has a vision and a huge potential of financial gain.
What Is Regulation Crowdfunding?
Regulation crowdfunding is the process of raising capital for startups and companies from groups of people or organizations. For startup owners, it means helping them turn their ideas into real businesses by raising the capital they may need! For investors, it allows regular individuals to invest in the early stage of the startups that they love.
The idea, procedure, and purpose of crowdfunding vary from one company to another. While some crowdfunding companies like GoFundMe work in the form of donations, others offer an opportunity to raise capital in return for a potential profit or reward! WeFunder is just an example of that type of platform!
How Does WeFunder Work?
WeFunder works as a hub for both startup owners and investors. As a business or startup owner, you can simply create an account and start fundraising instantaneously. There are no upfront fees for doing so, and you only pay the platform’s fee once your goal is met!
Looking forward to raising captital for your startup? Get a $2500 discount on your first campaign!
For regular individuals, WeFunders acts as a marketplace that has a variety of startups and companies in different industries and categories that investors can invest as little as $100 in, and just be part of their journey!
How Does WeFunder Make Money?
WeFunder makes money by charging a carried interest on successfully completed projects! There are no upfront fees, and the interest is only earned when the goal is met. WeFunder’s fees vary from 5%-20%, depending on the regulation class of the crowdfunding campaign. This is always clearly disclosed!
How To Make Money On WeFunder?
Initially, the people behind WeFunder created it for themselves. They wanted to invest in their friends. They also wanted to support causes they cared about with their hard-earned dollars. So, you can make money on WeFunder by either raising capital for your own startup or simply by earning a return from investing in other ones!
Method 1. Make Money On WeFunder Raising Capital For Startups
The first way of making money on WeFunder is by raising capital from the crowd. The platform helps thousands of potential founders get off the ground and take their shots.
Do you have a startup that needs capital, or have an idea that you want to turn into a reality? WeFunder can help you achieve exactly that! Create your free account and start raising money.
How Much Can You Raise On Wefunder?
If you’re raising with Regulation Crowdfunding, you can raise as little as $50K, all the way up to $5M! In a few cases, for idea-stage founders raising from their friends and family, we may lower it to $20,000.
How To Start A WeFunder Crowdfunding Campaign?
The process of starting a CF campaign on WeFunder involves three main steps – Campaign Preparation, Fundraising, and Closing. Each of these steps involves baby steps at different levels:
- Campaign Preperation – In this phase, you will start by creating your WeFunder profile and provide information about your business, things like potential riss and GAAP financials. WeFunder makes it easy for you to create the landing pages with no hassle. You just need to bring friends, family, and colleagues to invest in your business.
- Step 1: Get started on Wefunder.com [30 minutes]
- Step 2: Receive a fundraising estimate from our team of experts [1-2 business days]
- Step 3: Finish filling out information for the SEC [3 hours]
- Step 4: Build a polished profile [3 hours]
- Step 5: Get ready to launch! [5-10 days]
- Fundraising – This is a phase that takes from a month to 6 months, and your job during this time is to bring the crowd to invest in your business. While you can expect 50% of the investors to come from the WeFunder community, you would need to attract potential investors from your own circle.
- Closing – Your campaign ends once you reach your maximum goal or your deadline comes. In this phase, WeFunder will collect all the money (if your goal’s met) and deduct their fixed success fee.
- Step 1: Tying up the loose ends. [3-6 weeks]
- Step 2: Continue to engage the network you’ve built. [30 minutes]
What Is WeFunder Acceptance Rate?
WeFunder’s acceptance rate depends on different factors that they decide when you prepare for your SEC filing. They accept nearly any type of company, be it a brick-and-mortar restaurant or a high-tech software startup. However, they do not fund marijuana, porn, gambling, banking, or investing companies.
What Is WeFunder Success Rate?
WeFunder’s success rate once you’ve started your campaign is 75%, and the average successful fundraise is $320,000+!
How Much Does WeFunder Cost? (keyword WeFunder fees)
WeFunder fees vary depending on the classification of the regulation crowdfunding campaign. On average, WeFunder costs for raisers 7.5%. For instance, if your campaign goal is $100,000 and it has been completed successfully, you will need to pay a fee of $7,500 to WeFunder.
If by any chance you were invited by a scout, both of you will earn $2,500! (Claim your $2,500 on your first CF campaign by clicking here!)
Does WeFunder Have An Upfront Fee
WeFunder has zero upfront fees and you’ll only be charged a fixed 7.5% fee once your goal is met! Investors’ money will be held in an Escrow account and once the project is closed successfully, money will be distributed and WeFunder will take their fee!
How Do You Promote A WeFunder Crowdfunding Campaign?
When you list your startup on the WeFunder marketplace, you can expect 50% of contributions to come from their own community of investors.
For the other 50%, you need to actively work on promoting your campaign and getting it noticed. This can be achieved by getting your friends and family members to invest in your startup, which can be solid social proof, and through paid advertising on various channels and mediums!
If you can raise $50,000 or more from people you already know, it is much more likely you can raise money on Wefunder successfully.
Method 2. Make Money On WeFunder Investing In Startups You Love
How To Invest In WeFunder Startups?
First, you would need to go to Wefunder.com — Explore, in the top section of the site. By joining the startup marketplace, you can find companies in the technology, infrastructure, software, hardware, retail, food, entertainment industries, and more!
In each company’s profile, you will get the chance to learn more about it, the people, and the vision behind it. You can read the highlight of the startup, learn more about its utility, or even ask them a question you may have!
Usually, the reasons why you should be investing in a certain business are found inside the company’s profile on WeFunder, and you will also get the chance to see what their lead investor has to say about the business!
What Is WeFunder Minimum Investment?
WeFunder allows investors to invest as little as $100 in startups and companies they love, to help them have a diversified and healthy portfolio of small investments rather than one that has the chance to fail!
Is WeFunder a Good Investment?
WeFunder offers you an opportunity to invest in early-stage startups and become a shareholder-owning equity! If you invest in successful startups, you can make money. If you invest in startups that fail, there’s a chance to lose all of your money! It’s always advisable to invest only what you’re willing to lose, and in startups that you understand and love!
How Do You Earn A Return With WeFunder As An Investor?
The amount you may earn as an investor on WeFunder depends on the type of investment contract the company is offering. There are four classes on WeFunder:
- Debt – This is the most straightforward class of earning a return on weFunder, and it’s either in a form of a simple loan like your car loan that has a fixed prepayment schedule known in advance, or a revenue share structure. With the revenue share model, you will be promised a certain profit, such as 2X your investment.
How long until I see a return? For simple loans, there will be a certain number of months until it’s paid back! For revenue share, the faster the business makes money, the faster you will see a return.
- Convertibles – Early-stage technology startups that raise a priced round, such as Transparent Business, use convertible notes that will convert your investment to stock at a later date in the future. This means that you will become a shareholder owning equity and if the value of the stock goes up over time, you can earn a return and even sell the stock for a profit!
How long until I see a return? Convertibles take investors a long period of time till they see a return. You will basically be waiting until the company goes public or is acquired, and this doesn’t happen overnight!
- Stock, No Dividends – When companies do a priced round like this, they allow you to buy equity at a fixed price per share, and if the company is successful, the value of the stock can increase with each subsequent round of financing, until the company goes public, then you earn a return. You can also sell the stock for a higher market value!
- Stock, Dividends – The fourth class of earning a return on WeFunder is stocks that pay dividends, which are businesses that offer a percentage of annual profits. Please note that most companies, especially startups, almost never offer dividends, but local businesses often will.
How long until I see a return? It depends on how profitable the business is because dividends are the distribution of a company’s profit!
WeFunder Competitors
So, how is WeFunder different than its competitors, and what makes it unique in the market? Here are some comparisons between WeFunder and the most well-known companies in the space:
StartEngine Vs. WeFunder
StartEngine has a pretty significant average campaign raise when compared to WeFunder. This, however, shouldn’t be ruled out! WeFunder prefers SAFE offerings, while StartEngine specifically avoids offering them. Generally speaking, StartEngine’s fees are a little bit more intensive; 7%, plus 2% on raised equity, plus $10,000 collection of deferred revenues when the offering is complete! WeFunder’s fee is 7.5%!
WeFunder Vs. Kickstarter
Kickstarter allows people to support startups by buying their products. So, technically, anyone who contributes to a campaign on Kickstarter is considered a customer because they will be waiting for an actual product. WeFunder, on the other hand, lets investors own a small stake in the company and be part of the whole journey!
SeedInvest Vs. WeFunder
The thing that SeedInvest claims they are different for is that they feature only highly vetted investment opportunities. While WeFunder allows you to invest from as low as $100 in startups you love, the minimum investment required on SeedInvest is $500!
WeFunder Vs. Republic
Although you can invest from as low as $100 on WeFunder, Republic’s platform-wide minimum is $10, however, most companies select somewhere between $50 and $250. In addition to that, while Republic doesn’t allow you to invest if the campaign reaches its maximum goal, you can still invest in startups listed on WeFunder even if the goal is met!
Is WeFunder Safe? How Safe Is It?
WeFunder involves zero risks for startup and business owners because they are not obligated with any upfront fees, and technically, they pay the platform’s fee after their goal is met and their capital is already raised! Investors, however, should always do their own research and due diligence, and only invest with what they can afford to lose.
As a company, WeFunder is legit, safe, and trustworthy, but investing in startups is risky since they are more likely to fail in their early stages. If you invest wisely in the right startups, you can make money, and if you invest in startups that fail, you will obviously lose your money! Here’s where your research and due diligence will come into place!
Being said, as a startup investor, there are some tips and rules that you can follow to limit your loss and get the most out of your investment. Here are some tips for a first-time investor on WeFunder:
- Do your own research – Before investing in any company, it would be great to be curious and learn more about its structure, business model, and people behind it! WeFunder also allows you to ask the founders questions on their company profiles.
- Invest in startups you love – It’s important to invest only in companies you understand and preferably love, because if you are a customer and love the product, then others are more likely to love it too! So, it’s a good investment.
- Diversify your portfolio – Experts agree on the idea of diversifying your portfolio as this will allow you to have a healthy mixture of multiple small investments rather than one large one that has the chance to fail!
- You may lose it all – Always keep in mind that investing involves risk, and you should only invest what you’re willing to lose! Investing in startups is much riskier because they are more likely to fail, so be cautious!
- Follow the leaders – WeFunder has what’s called “Leader Investors”, and as of May 2020, they require that most companies have a lead investor before their offering closes. You can know who the company’s lead investor is, see how much they invested and why, and make your own decision if you trust their judgment.
In the above example, David Chen is the Lead Investor for that startup. Each company has its own lead investor.
Is WeFunder Legal?
WeFunder is investment-based crowdfunding that includes equity crowdfunding. Luckily, regulation crowdfunding and peer-to-peer lending were regulated by the Financial Conduct Authority (FCA) and became legal in 2016. Meaning that there’s nothing that makes WeFunder unlawful or illegal!
WeFunder Success Stories
WeFunder has been helping every founder take their shot. In the past few years, WeFunder has funded over 1493 founders, helped invest over $282 million, created over 18,859 jobs, and raised over $5 billion in capital for startups!
Wefunder itself was the first startup to raise funding on Wefunder, raising over $10 million from about 1,000 investors! So, they drink their own Kool-Aid!
They have funded coffee shops, cures for cancer, movie studios, supersonic planes, and more. Many are alumni of Y Combinator. Check out some of the best WeFunder’s success stories:
| Company | Follow-on Funding | Last Status | Return Multiple | Value of $25K Investment |
|---|---|---|---|---|
| Zenefits | $581,500,000 | $500M Series C by Fidelity | 281.68X | $7,042,000 |
| Checkr | $309,000,000 | $160M Series D by T. Rowe Price | 34.31X | $857,750 |
| Rappi | $1,391,800,000 | $1B Series E by SoftBank | 26.23X | $655,750 |
| Ginkgo Bioworks | $719,000,000 | $290M Series E by T. Rowe Price | 13.76X | $344,000 |
| Guesty | $59,400,000 | $35M Series C by Viola Growth | 12.82X | $320,500 |
| Ironclad | $84,000,000 | $50M Series C by Y Combinator | 11.01X | $275,250 |
For more success stories, testimonials and motivation, feel free to check out the WeFunder official website here.
Conclusion – Is WeFunder Worth It?
Are you risk-averse? I’m afraid that WeFunder is not for you, because it involves risk! Generally speaking, investing in startups is a bit riskier because they are more likely to fail in the early stages, but if they succeed, it could be a fruitful investment that yields good profits for you!
In this article, we have discussed what WeFunder really is and what makes it unique and different than its competitors. We’ve also gone through the exact process of raising capital or investing in startups on the platform and answered some frequently asked questions about the company.
Are you looking forward to raising capital that might take your startup or business to the maximum levels? Then WeFunder can help you build professional crowdfunding campaigns with attractive landing pages for investors. Get started now and claim your free $2500 discount on your first successful campaign!
Ready To Get Started?
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Cheers,
Odeh Ahwal
