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Investor Verification Process

Due to a recent change in securities laws, Wefunder is now allowed to present private investment opportunities to the general public. For 506(c) offerings, Wefunder may only accept investments from accredited investors, and must take reasonable steps to verify that all investors are, in fact, accredited investors. Wefunder takes this requirement very seriously. To that end, we use a robust process to verify each investor’s accredited status, and regularly review the process to ensure that it remains effective. Wefunder’s verification and review processes are described below.

Wefunder’s verification process begins when a potential investor registers on our website. Each potential investor must answer questions during registration regarding his or her income and net worth, including a certification as to the investor’s expectations regarding income for the current year. Wefunder uses this information to establish an expectation that the investor is an accredited investor. For investors whose representations indicate accredited status, Wefunder immediately seeks to verify the investor’s accredited status and inform the investor of the result within 48 hours.

First, Wefunder verifies the investor’s identity using a third-party identity verification service. Wefunder then asks the investor to upload additional information to verify his or her accredited status. The additional information may include, for example, a letter from the investor’s lawyer, registered financial adviser, certified public accountant, or registered broker/dealer indicating that such individual or entity has determined that the investor is an accredited investor using reasonable steps within the prior three months. The additional information may include tax returns, W2's, bank or securities account statements, a credit report, and a representation that the investor has disclosed all liabilities necessary to make a determination of net worth. A Wefunder employee then manually reviews the additional information to determine whether the investor is accredited.

In a very small percentage of cases, with famously wealthy business celebrities, a Wefunder employee may manually verify their accredited status by obtaining public information available on the Internet. For instance, if Mark Zuckerberg or Larry Page applied to invest on Wefunder, Wefunder will verify their accredited status by documenting screenshots of publicly available information that verifies their income or net worth.

Wefunder periodically reviews its own verification process for verifying an investor’s accredited status to ensure it is reasonable. Wefunder reviews its own process by conducting internal audits and testing a random sample of non-IRS verified accredited investors against the IRS database (again, provided that the investors have authorized Wefunder to review their tax returns). Throughout the verification process, Wefunder maintains a detailed record of the process used to verify that each investor is an accredited investor.

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