Why Wefunder?

What is Wefunder?

Wefunder helps startups and small businesses get the funding they need to thrive. We help do all the grunt work of fundraising, so you can focus on what is important: growing your business.

How are you different than Kickstarter?

Wefunder lets investors own a small stake in your company, while Kickstarter allows you to sell products.

We think Kickstarter is super cool. But a customer is very different than an investor. A customer just expects a product. An investor wants to help your company over the long-term.

Why raise funds from the crowd?

To turn your customers into owners. Looking for a connection to a big customer? Want feedback on your product from an industry insider? A crowd of investors can help in ways traditional investors can't. They are often your most passionate evangelists.

How are you better than your competitors?

We're the largest funding portal by dollars raised, number of companies funded, and number of investors. We know what it takes to work with good companies... and therefore have one of the best portfolios in the industry. You want to raise funding on a web site alongside other good companies. We've worked hard to ensure that raising on Wefunder is not a negative signal to investors, like it is with some of our competitors.

We understand legit founders are super busy running their companies and can't afford wasting time doing stupid stuff. So we do all the grunt work for you. More than that, as founders ourselves (not finance guys or bankers), we know exactly what you are going through. We're a friendly team.

Finally, we've spent four years preparing to ensure we can keep costs down. People expected Regulation Crowdfunding to cost over 10% of the round and thousands of dollars. We charge $0 to generate the stuff you need to start fundraising (some of our competitors charge $5,000 just for part of it).

Who else has raised funding?

Wefunder itself was the first startup to do so. We raised over $6 million from 300 investors, in amounts ranging from $100 to $250,000. We've sinced funded over 1,948 companies, including Zenefits, Checkr, CaseText, Gingko Bioworks, Freight Farms, and Goldbely. Most are alumni of Y Combinator.

How many investors are on Wefunder?

We currently have 4,544,515 registered investors on Wefunder.

Why did you guys create Wefunder?

We founded Wefunder in 2012 because we thought it was stupid that it was illegal to invest even $100 in our friends simply because we weren't rich. We also thought the Venture Capital model was dysfunctional and focused only on helping a tiny sliver of deserving businesses. Finally, we felt banks were taking less and less risk. 80 years ago, your community bank - composed of your neighbors - funded you. Now some conglomerate on Wall St. ignores you.

So we lobbied Congress and helped pass the JOBS Act in May of 2012. It took until May 16th, 2016 for the SEC to write all the Regulation Crowdfunding rules. Now the fun begins!

Building a Profile

How do I create a profile?

Visit the Raise Funds page, put in your company name, then hit that green button.

Can I have a profile and not fundraise?

Yes. We actually think it's a good idea to create a basic profile and start collecting followers. Build trust and gain an audience before starting a fundraise.

How much does it cost to create a profile?

It's free.

How do I build a good profile?

Check out our tips.

Can I promote my profile?

Yes, you can share your profile publicly. However, until your fundraise is enabled on Wefunder, it is not legal to say that you are fundraising now, or have a concrete plan to do so in the future.

You are allowed to ask people to "follow" your profile to show their support, but are not allowed to say things like "we are going to fundraise on May 16th" or "as soon as we file with the SEC, we'll be raising at $4.5 million valuation."

What other legal issues should I be aware of?

When building your profile, avoid future promises and forward-looking numbers like "we plan to make $5 million next year." Instead try, "We hope to continue growing by doing x, y, and z." If you decide to fundraise on Wefunder, you are legally liable that every statement on your profile is 100% true, and that you have not omitted any important information investors should know about (for example, a lawsuit). Read the Legal Primer for more information.

Fundraising

When am I ready to start fundraising on Wefunder?

We fund companies at all stages: you can use Wefunder to raise as little as $50,000. However, unless you plan to raise from only a circle of close friends, we recommend not to fundraise on Wefunder until you have some proof points that can convince investors you "get stuff done," and are not just a dreamer. While there are no requirements, we recommend at least one experienced investor that publicly endorses your company, and sets the terms of your fundraise. It also helps to have at least a working prototype, and ideally, a few paying customers. But before then, create a free profile, and start collecting followers!

What kind of businesses can get funded?

We accept nearly any for-profit U.S. Corporation or LLC, be it a brick and mortar restaurant or a high-tech software startup. We do not fund marijuana, porn, gambling, investment companies, or banks.

What legal issues do I need to be aware of?

You should carefully read the Founder Legal Primer.

What fundraising exemptions do you support?

We support Regulation A+, Regulation D 506(b) and 506(c), and Regulation Crowdfunding. To learn what all this means, and to choose the best one for your business, read our Founder Legal Primer.

What investment contract can I use?

We support raising funds with any security, such as a loan, convertible note, SAFE, revenue share, or priced stock. You can upload your own investment contract, or, if you'd rather not hire a lawyer to re-invent the wheel, we include several investment contracts you may use free of charge.

How do I set my valuation or terms?

It's best to raise funding on Wefunder after you've raised from at least one professional investor you personally know. They will help set the terms.

How much does it cost to fundraise on Wefunder?

It's free to create a profile and start collecting followers. For Regulation Crowdfunding raises, Wefunder charges up to a 7% fee based on your online funding total, but only if your funding is successful. Any additional payment processing fees are paid by investors. If your Regulation Crowdfunding exceeds the $5,000,000 cap, we will spin up a Regulation D raise for accredited investors free of charge.

How is this legal?

In 2012, Wefunder helped pass the JOBS Act, a new law allowing businesses to raise funding online. May 16th, 2016 is the first day in over 80 years that it'll be legal for everyday Americans (not just the rich or banks) to invest in private companies.

Do you group all investors into one shareholder?

If you are raising with Regulation D, we can group all of your small investors into one shareholder on your cap table using a WeFund SPV. For Regulation Crowdfunding, we created a special Crowdfunding SAFE that proxies all voting power to a Lead Investor and the CEO. With both mechanisms, if you ever need a signature during your follow-on financing, you only need to deal with one person.

Do all those investors have voting rights?

If you use a WeFund, no. We avoid this by having small investors proxy their voting rights to Wefunder, and we act on their behalf. We will exercise all of the voting rights held by a WeFund in the interest of the fund's investors.

Small investors also don't have any voting rights if you use the Wefunder Crowdfunding SAFE.

How does the investment process work?

When an investor applies to invest, they digitally sign the investment documents and enter their bank account information. Once accepted, the investment is sent to an escrow account. The money will be transferred to your corporate account 7 days after the round closes, provided your fundraising target has been met.

How should I set my fundraising target?

If you are fundraising with Regulation Crowdfunding, you must hit your funding target in order to get funded. However, you are allowed to accept oversubscriptions.

So we recommend setting the funding target to the lowest amount of money you can make use of, then specifying how you'd use any extra cash. For instance, if it costs $50,000 to purchase a new widget-maker, but you could use $500,000 to buy a bunch more equipment, set $50k as your funding target then indicate what you'd do with the $500k.

What is the minimum I can raise?

$50,000

What is the maximum I can raise?

With Regulation Crowdfunding you can raise a maximum of $5,000,000 per year. You can, however, always raise an unlimited number of dollars under Regulation D from accredited investors. Wefunder will spin up a free Regulation D campaign for you if you cross $5,000,000. For those who raise $5m with Regulation Crowdfunding on Wefunder, we will host a Regulation A+ campaign for free.

Sorting & Curation

Does Wefunder curate projects?

No. It's not our role to choose what is worthy of investment. We screen companies for signs of fraud, but we do not otherwise pass judgement.

Instead, each investment club on Wefunder may curate companies in their particular area of expertise.

How are companies sorted on Wefunder by default?

Offerings are sorted by objective metrics including page views, press mentions, Twitter followers, Facebook likes, investment velocity, number of Wefunder followers, endorsements, ratings by club members, profile completeness. This algorithim can NOT make good investment decisions. That's what some humans can do.

Can I pay to be featured more highly?

No. That would be unethical. It's also illegal. Every company that has ever asked us this question has looked super scammy.

Promoting a Campaign

Am I allowed to promote my fundraising?

It depends on which fundraising regulation you choose to use. Check out the Legal Primer.

You are allowed to promote if you use Regulation Crowdfunding, Regulation D Rule 506(c), or Regulation A+. You are not allowed to advertise if you use Regulation D, Rule 506(b).

What legal restrictions are there on advertising?

For Regulation Crowdfunding, you are only allowed to promote after your Form C is filed with the SEC. Oh, and never say the SEC has "approved" your offering. They don't like that.

You are allowed to advertise anyway you like - email, Facebook, shouting off the rooftops, etc. However, all your advertisements must be limited to factual information (i.e., avoid "invest in the best donut shop in the world"). Also, by law, all of your advertisements must include a link to your Wefunder profile. Check out the Legal Primer for more info.

What can I say (or not say) in 'real life' to the public?

For Regulation Crowdfunding, you are allowed to talk to the public about the facts of your business or products, provided you do not mention the terms of your fundraise.

The SEC's final rules on Regulation Crowdfunding are clear on this point:

In addition, the final rules do not restrict an issuer’s ability to communicate other information that might occur in the ordinary course of its operations and that does not refer to the terms of the offering.

If a stranger walks into your store and chats you up about investing, feel free to answer their questions about your business. You must, however, point them to your Wefunder profile to see the terms and make an investment. And don't say non-factual things like, "We're the best donut shop in the world and we're gonna grow HUGE!"

For 'Demo Days', you can mention you are on Wefunder during your presentation if you keep your presentation limited to facts and say nothing about terms. Most credible demo days - such as those organized by Techstars or Y Combinator - already do not let their participants mention they are selling securities (or the terms of their offering) so as to not be deemed a 'general solicitation' of securities that is forbidden for most Regulation D offerings.

That same rule applies for conferences. You may mention you are on Wefunder if you limit your discussion about your business to facts and do not mention the terms.

How much work do I have to do?

Wefunder has thousands of registered investors across America who love startups and have invested millions of dollars in founders they don't know. However, your friends, customers, and local community will be your most enthusatic and valuable supporters. They’ll help spread the word to people they know, get the ball rolling, and provide the "social proof" that makes strangers more comfortable investing. The more work you do to get an initial "pop" on the first day of your campaign, the more successful it will be.

How much money can I raise on Wefunder?

Like most campaigns, you get out what you put in. The success of your campaign will hugely depend on the quality of your profile and the power of your following. (Learn more about successful campaigns in our Pitch Guide and Fundraising Principles .)

The minimum campaign requires you to raise $50,000. If you’re raising with Regulation Crowdfunding, you can raise up to $5,000,000.

Post-Campaign

How do I close my campaign?

After your funding target has been met, and at least 16 days have passed, you may initiate the close of your campaign at any time.

After you decide to close your campaign, investors are given a 5 day warning. They are given one last chance to cancel their investment and request a refund.

What happens if a material change occurs?

If a material change in your business has occured during your fundraise, you must disclose it to your investors before you close the round. All investors must then reconfirm their investment.

A material change is anything a reasonable person would think should be disclosed to investors because they might change their mind. Some examples could be your co-founder quitting, the big deal you bragged about falling through, or an unexpected drop in sales.

What if my campaign fails?

If your campaign fails, you can run a new campaign on Wefunder a month after the original campaign closes. Use this 30-day buffer to gain more followers, improve your numbers, and do anything that might boost your investments for the new campaign.

Can I extend my funding deadline?

Yes. However, this is a material change that requires all of your investors to reconfirm their investment. Still, it's often a better option then failing.

How long does it take to get the money?

Generally, we will wire your first disbursement of funds to your corporate account within two weeks.

Will investors contact me directly?

No. We don't hand out your email addresses or phone numbers. All communications with investors are handled on your company feed.

How do I update investors?

On your dashboard, or when visiting wefunder.com/write, you will find a form to send updates out to the Wefunder community. Feel free to add videos, photos, and more!

In the bottom right hand corner (to the left of the Post button ) you’ll be able to adjust the audience for your update. You can choose ‘Public’ or ‘Investor Only’. If you choose ‘Investor Only’ your investors will receive an email containing your update.

How often should I provide investor updates?

We try to update our investors at least once a quarter, while plenty of our portfolio businesses send updates monthly. Do what works for you, as long as you keep your investors in the loop.

Do I need to file an annual report?

If you complete a successful Regulation Crowdfunding offering, you’ll need to file a report once a year within 120 days after the end of your fiscal year to update the SEC and your investors. The report highlights your accomplishments over the last year and details your future plans. You’ll also need to include updated financial statements. The financial statements do not need to be audited or CPA reviewed, but they need to include notes and be certified accurate by the principle executive officer.

If you neglect to file a report, you will be unable to fundraise with Regulation Crowdfunding again until you file the annual report (however, you may still raise funds from accredited investors with Regulation D)

Different companies have different reporting requirements:

• If your company was dissolved, if you’ve liquidated all your shares, or if you’ve repurchased all issued shares, you do not need to file an annual report.
• If you have fewer than 300 shareholders, you only need to file one annual report. Then you’re off the hook!
• If you have more than 300 shareholders but less than $10 million in assets, you need to file three annual reports before you are exempt.

If you don’t meet any of those requirements, then tough cookie, you need to keep filing annual reports. But fret not, our tool will be there to the rescue!

Is it free to use Wefunder after my fundraise?

Yes. It's free to continue to use our platform to communicate with your investors.

WeFund SPV

What is a WeFund?

Most startups on Wefunder raising funds under Regulation D do so with a WeFund. A WeFund is series of an LLC that exists for the sole purpose of investing in one specific startup. All the investors pool their capital in the WeFund, which then invests as one entity in the startup. The startup only has one direct investor: the WeFund.

Why use WeFunds?

Startups use a WeFund to ensure their follow-on financing won't be at risk. Venture capitalists are uncomfortable when startups have many small investors (they don't like collecting thousands of signatures). With a WeFund, all those smaller investors are represented by one large entity: us.

Can I invite anyone to invest directly, bypassing the WeFund?

Yes. If you meet an investor who wants to invest a smaller amount and doesn't wish to use the WeFund, you may invite them to invest directly in your company. This is up to your discretion.

Who manages the WeFund?

WeFunds are managed by our fully-owned affiliate: Wefunder Advisors, an exempt reporting investment advisor. Technically, the smaller investors who invest via the WeFund are not your investors: they are ours.

Who decides who gets to invest in the WeFund?

We do, but with your input. We've found that startups are often too busy to research people who want to invest smaller amounts like $100. If your deal is over-subscribed, we prioritize the investors who we feel can help your company the most. At the end of the day, we're trying to find the best investors for your startup, so feel free to tell us what you are looking for.

Do WeFund investors have voting or information rights?

No, Members of the WeFund do not have voting or information rights. All voting and information rights are proxied to the Moderator of the WeFund, Wefunder Advisors, which will act on their behalf.

How many can invest in a WeFund?

Due to regulations, only 99 investors may invest in a WeFund.