Scouting Companies

What makes a company successful on Wefunder?

Successful campaigns on Wefunder are a balance of investment quality and potential investor reach.

Companies that run successful campaigns either already have a community of users or customers (Hops & Grain), or they’re making something so important to a particular community that the campaign itself goes viral like Beta Bionics for the type 1 diabetes community.

Key numbers to keep in mind as you evaluate companies:

• The median investment amount on Wefunder is $350
• 70% of investments typically come from the company’s network
• Look for companies you’d invest in personally
• Aim for startups that can potentially raise a minimum of $100,000
• Companies that have already raised money on the same terms is a good sign

What factors should I look for in companies?

Traction

Companies with traction are more likely to be successful with Reg CF because they feel less risky to investors. If a business cannot demonstrate their ability to execute with concrete numbers, they might not be right for crowdfunding.

Before their Wefunder campaign, Hops and Grain had already proven they could run a successful business. In 2015 they did almost $2 million in revenue from their first location. This was evidence to investors that Hops & Grain could deliver returns.

Beta Bionics, the first campaign to hit $1 million, had a different form of traction: before their campaign launched, they had already begun Stage 3 of FDA trials. Their grand vision was made tangible with third party validation.

Lead Investor

Having a lead investor validates the terms of the investment.

Investing in startups and small businesses is complex. How is a company’s valuation set? What terms are appropriate? How many shares will I own? For investors who are new to these questions, it’s reassuring to know a more experienced investor has invested a large sum of money at the same terms.

Beta Bionics is a great example. Eli Lilly invested $5MM at the same terms available during their Wefunder campaign. Even investors who have no understanding of valuations can feel comfortable that Eli Lily has legitimized the deal,. That, in turn, makes new investors more likely to commit.

Audience

Successful companies drive 70% of their own investors. Companies with large engaged audiences have a better shot of success because they can drive more potential investors to the profile. Hopster’s had over 25,000 fans on Facebook and hundreds of people visit their physical space everyday. They were able to engage all these people to visit the profile and invest in the campaign. Look for companies that have large authentic (not paid for) audiences that visibly love the product.

Great Product Experience

How much do customers love the product? Is it a service or experience? Does the company have online reviews to measure customer satisfaction? Find companies that are loved - customers that already champion the brand are more likely to put their money where their mouth is. For instance, the local brewery is a more intimate and personal product experience than a generic ecommerce store. Fans are more likely to convert to investors when they’ve already had a great product experience.

Exciting Vision

People want to invest in companies that are important. A company with a compelling vision (with the proven ability to execute) can be successful, even if they don’t have a large network yet.

Beta Bionics is a great example. They built a bionic pancreas that automates insulin dosage for Type 1 diabetics, potentially saving children’s lives. Beta Bionics started their campaign with fewer than 5,000 Facebook likes but were building something so important that the campaign was picked up by several blogs and industry publications. Despite starting with a small following, Beta Bionics finished with over 700 committed investors.

Do I have to invest in companies I submit?

Above all, put yourself in the shoes of a potential investor and ask whether you’d invest if the company was live on Wefunder. You should be excited (or imagine a friend’s excitement) about the prospect of owning a piece of the company, because it’s likely that excitement will be felt by others too. If you’re not tempted to pull out your wallet then continue to search until you find a concept, team, or mission that makes your heart beat. Investment quality is far and away our number one criteria.

What are some of the most successful companies on Wefunder? Why were they successful?

Hops and Grain: Craft brewery opening second location near Austin, TX.

• Engaged social media following of 10,000+ fans. Physical location with hundreds of potential investors visiting everyday.
• Hyper local business. 77% of their investors live within 50 miles of the business.
• Great terms. 3x revenue share for early bird followed by 2x for remaining investors.
• Doubling down on proven model with second location near Texas State University and 35,000 beer thirsty students.

Liquid Piston: The first wholly new combustion engine and cycle in 85+ years.

• Moonshot idea over 8 years in development.
• Myriad applications and markets. Signed contracts with huge customers like DARPA.
• Cool visuals and videos of engine in action. Tangible evidence of product.
• Third party investor with some measure of klout (CTO of Compaq and partner at investment firm).
• Niche product appeals to a population of enthusiasts.

Cleveland Whiskey: Award winning whiskey aged in 24 hours.

• Radically different take on a much-loved product.
• Technology developed in house and proven with 10+ awards for flavor.
• Implicit endorsement of President Obama. Long press list of recognizable publications.
• $1M+ sales in most recent year.
• 25,000+ Facebook followers. Whiskey is an inherently sticky product that drinkers come to associate with their identity. Investing then becomes a badge of personal taste.

Force for Good: The first accelerator / fund for “Best of the World” B Corps.

• Well known advisory team of executives from world class companies.
• Endorsements and funding from organizations like Slow Money, Honest Tea, and Ben and Jerry’s.
• Well-intentioned idea to bolster the economy and fund socially conscious business.
• Large pool of investors outside Wefunder with founders who were aggressive about driving investor traffic.

Beta Bionics: Building a bionic pancreas to improve the lives of people with type 1 diabetes.

• Save-the-world idea. Bionic pancreas literally has the potential to save kids’ lives.
• Measurable progress (traction isn’t always revenue): Stage II FDA Trials.
• Large institutional investor. Eli Lilly invested $5MM at the exact same terms.
• Top shelf press list including The New York Times, NPR, Time, and BBC.
• Beautiful story of father on a mission to save his son.
• Connected strongly with the type 1 diabetes community who spearheaded fundraise.

Legion M: The first Hollywood studio owned by fans.

• All about the experience (more so than investment potential). No clear path to profitability but investors invested to partake in the experience of owning a movie studio and contributing to the filmmaking process.
• Founders created an excellent explainer video, building trust and familiarity with investors.
• Partners in the industry provide third party endorsement of experience and rolodex.
• Approachable and engaged throughout the campaign. Leveraged a massive social media campaign to engage investors and maximize exposure for the fundraise.
• 3,100+ investors. Low average investment amount.

This Is Ground: Premium tech leather accessories handmade in Los Angeles.

• Long and engaged list of potential investors via email and social media. 17,000 Facebook followers. Extensive email list of product owners from their online store.
• Experienced founder with exits and impressive investments (Dollar Shave Club).
• Beautiful product handmade in the USA illustrated with high quality video.
• Strong, steady revenue growth.
• Recognizable enterprise customers such as Apple, Nascar, NBC, and The Wall Street Journal.

What kind of companies will Wefunder not launch?

We don’t fundraise for companies incorporated outside the United States. We also do not fund companies in the marijuana or pornography industries. We also reserve the right to deny a company if we think them suspicious for any reason—protecting investors is paramount.

How do I find potential companies for Wefunder?

Small businesses and early stage startups are everywhere. Here are a few ways to find them:

• Start with companies you know and love. Genuine fans are more likely to get the founder’s attention.
• Scour the internet. There are several of online resources to discover startups. Use industry organizations and online registries as libraries for potential businesses. To find businesses outside of tech, try trade magazines, ‘best of’ articles, or specific Google searches. The internet is an amazing source of deal flow. Just remember to pick your companies carefully and do your research. Do not spam long lists of random companies.
• Network with founders. Nobody knows founders like other founders. They know who’s good, who’s fundraising, who’s a professional and who’s just a big talker. Ingratiate yourself with local founders and tap their network.
• Follow other investors. There are likely many local angel investors that invest in small private companies often. Finding quality private companies is their job and you’d do well to learn from their track record.
• Talk to local organizations: Hubs for startups and small businesses are a great source of leads. Contact them and explain how you can help their affiliated companies raise money. Ask for an introduction to 1 or 2 companies they think may be a good fit. If those work out well then you’ll have built a foundation that warrants more introductions.
• Press and Media. Reporters periodically write about local companies, or put together “Best of” lists for specific industries. They’ve done most of the research for you.

Why is an existing network of potential investors crucial for fundraising success on Wefunder?

It's absolutely important that companies have a way to reach a 'crowd' of people. While we do have 4,732,804 investors on Wefunder, the most successful fundraisers drive 70% of the investment volume from their own network.

There are a few reasons for this: By law, Wefunder can only sort companies by objective measures(raising more money faster than anyone else). A company’s network of friends, family, customers, fans, and potential angels who are already familiar with the business are more likely to invest than a stranger on Wefunder learning of the company for the first time.

There are exceptions. Those save-the-world ideas like Beta Bionics and Liquid Piston can drive a huge amount of investment without a network because investors are more driven by the company’s potential impact than a potential return, and they are more likely to get industry press coverage. If you can find a moonshot idea with traction and an existing network you’ve found the perfect combo.

How big should a company’s network be?

Having an engaged list of fans is an important predictor of a successful campaign: up to 70% of investments often comes from the company’s own network.

Let’s take a look at Hops & Grain, who raised $1MM. They have:

• 11,323 Facebook likes
• 15,792 Twitter followers
• 2,015 email addresses

But these aren’t just numbers, these are customers and community members who love Hops and Grain beer and jumped at the chance to invest when their campaign launched. Hops & Grain hit their $50,000 goal in less than 24 hours and raised $200,000 just 2 days later. The early momentum helped catch press coverage and convinced other investors from all over the country to invest in a small, craft brewery they’d never heard of.

It’s important for a company to not only have an existing community, but one that is engaged. A large social media following that doesn’t interact with the company’s posts is unlikely to invest. For example, Bolder Band has 500,000+ Facebook fans but their average post receives less than 50 engagements (0.01% engagement). 6 weeks into the Bolder Band campaign they had raised just $14,000. A massive audience doesn’t matter if no one cares. Companies with a smaller audience of engaged devoted fans is much more likely to succeed. Find out how many newsletter subscribers a company has, how often their customers buy, or how active their users are. These are great examples of engagement.

Pitching Companies

What is my role at Wefunder as a Scout? How should I present myself?

You are a Scout, not an employee of Wefunder. It is best to frame yourself as an advocate of equity crowdfunding as a means for early stage companies to fundraise and galvanize a marketing force. Frame yourself as someone who is passionate about helping startups and small businesses succeed who gets paid by platforms like Wefunder for referring companies that are a fit. Please be transparent about the relationship (other platforms do in fact have similar scout programs). Never hide the fact that Wefunder pays for referrals of companies likely to succeed.

Will Wefunder provide business cards?

No. You are not a Wefunder employee and should not present yourself as such. Feel free to use your own business cards with your own branding.

How should I pitch companies?

1. Send an email

The first email should should be personalized for them and mention why you are interested in their specific product or service. They probably won’t know what Regulation Crowdfunding is, so you’ll need to explain that they can now raise debt or equity financing from their customers/users/community members. Include a link to a campaign on Wefunder that has raised $1MM (or a similarly impressive amount), and most closely resembles the company you’re speaking to. Close your email with a request for a 15 minute phone call or in person meeting to get their feedback.

Making the ask small and specific makes it much more likely they’ll say yes. And make sure not to sound salesy. Focus on why you want to help the business and what excites you about them—don’t sound like you’re selling them a service.

2. Follow up

If you haven't received a response after 3 days, send another email or give them a call if you have their number. Just because they don’t get back to you doesn’t mean they’re not interested. Entrepreneurs get hundreds of emails a week pitching new opportunities. It’s your job to cut through the noise and get their attention.

Statistic on how many follow ups it takes to get a meeting?

3. Get on the phone or meet in person

During your phone or in person meeting, try to let the founders questions drive the conversation. You’re not there to lecture them on Regulation Crowdfunding but to explore together if it a fit for their business Stress how easy the process is and that they don’t need to pay anything up front. Make sure to mention how valuable it is to have hundreds of investors that promote their business. Entrepreneurs are busy, and running a crowdfunding campaign can feel intimidating, especially if they’ve never done it before. Make sure they know Wefunder handles the nitty gritty details. If they ask questions you don’t know the answer to, be honest. Say you don’t know, then offer to set up a call with someone on the team at Wefunder.

What should I expect founders know about equity crowdfunding in general?

Almost no one knows about Regulation Crowdfunding. Here’s a fun fact: we called up 500 small business owners and asked them if they knew about Regulation Crowdfunding. Only 6 of 500 answered yes. That’s 1.2%. Focus on how you can help them solve a fundraising or marketing challenge. Regulation Crowdfunding should be a solution to a challenge they already have, not an idea you want to teach them about.

What are the benefits of Regulation Crowdfunding for startups?

• Marketing Value: A restaurant or brewery with 500 local investors now also has 500 lifelong customers who will bring their friends in for a drink whenever they can. Hundreds of investors (who can invest as little as $100) take on the identity of investors and become a business’s most powerful marketing force. Investors become brand evangelists.
• Ease of Capital: Companies can raise up to $1MM with Regulation Crowdfunding. Founders have called Wefunder the easiest money they’ve ever raised. We handle the entire investment process and send successful companies one big check when they close.
• Exposure: Companies benefit from having their pitch online, exposed to our 85,000+ investors plus their own community. Not only do companies receive more traffic to their websites and demand from customers, Wefunder has also been credited with introductions to influential investors which can lead to both checks and mentorship.

How many times should I follow up with founders?

You should follow up immediately and often with founders. If they stop responding, send a gentle question about whether you might still be able to help. You can also call the founder directly and politely ask how their fundraising round is progressing. They may have heard critiques about Wefunder or Regulation CF without understanding the details. Gently addressing objections can turn founders back around.

If you don’t hear back after a second follow up, we suggest you put the company on a long term follow up list and reconnect with the founder in six months.

What if I can’t answer a founder’s question?

You should definitely be a source of knowledge for founders, but never answer questions when you’re not certain of the answer. Providing the wrong answer is far worse than admitting you don’t know, then following up with the correct answer later. Shooting from the hip diminishes trust; following up with confidence builds trust.

Dig in to our FAQ to for the answer. If you can’t find answers online then feel free to schedule a short phone call between Wefunder and the founder to answer the most complicated and subjective questions.

Submission Process

How do I submit a company to Wefunder?

You should submit a company to Wefunder as soon as you have enough information to help us determine if it’s a good fit. If you haven’t sold the founder on Wefunder and Regulation CF yet, you can do so after Wefunder’s approval. It’s a poor experience for a founder to get the pitch, only to then hear Wefunder doesn’t think they’re a good fit.

At what point in the pitch process do I submit a referral to Wefunder?

You should submit a company to Wefunder as soon as you have enough information to help us determine if it’s a good fit. If you haven’t sold the founder on Wefunder and Regulation CF yet, you can do so after Wefunder’s approval. It’s a poor experience for a founder to get the pitch, only to then hear Wefunder doesn’t think they’re a good fit.

What information should I include in my submission?

The more information the better. We review dozens of companies every day and well-researched deals with traction numbers, vision for the future, and plans for growth and market analysis get more of our attention simply because we have more data points for diligence. You should also include an assessment of the company’s potential investor reach, e.g. social media followers and engagement, email list size, lead investors, prior investment rounds, and anything else that might signal how loud their megaphone will be and how many investors they can drive to the campaign profile.

How long should I expect to wait to hear back from Wefunder?

We’ll get back to you within 24 hours. Our responses will be on your dashboard: https://wefunder.com/scouts.

How do I know if another Scout has already contacted a company I’ve found?

Search for potential leads before you contact founders here: https://wefunder.com/scouts/contacted_companies. Receiving multiple emails from different Wefunder Scouts makes us seem unorganized. If we find you’re constantly contacting companies that have already been submitted to Wefunder, we’ll suspend your account.

How will I know if the company is accepted or not?

Based on the information you provide, we’ll make a judgment on whether or not that company will succeed on Wefunder. Sometimes we’ll need to do more research ourselves, such as speaking with the founder.

There are three possible verdicts:

• Not a fit: We will not pay a referral fee for this company because we don’t have confidence they will be able to raise money on Wefunder. This, however, does not mean the company is forbidden from raising on Wefunder—they can complete the launch process themselves starting at https://wefunder.com/fundraise.
• Not Ready Yet (“waitlisted”): We think this company has potential, but don’t think they are ready to crowdfund yet. Circle back every 3 or so months, and if you feel they have made significant progress as a business and have fostered a much larger audience, resubmit the business. If they are accepted, you’ll receive a referral fee.
• Approved: We think this company is a quality investment with a good shot at being successful on Wefunder. We’ll calculate your fee based on the quality of the company and how much work you’ve done.

What does it mean when Wefunder requests more information and a short phone call with the founder?

It’s often difficult to discern how appropriate a company is for Wefunder with just bits of information (traction, a website, and number of Facebook followers). If we think a company has potential we’ll request a 15 minute phone call to ‘meet’ the founder and ask specific questions. This is also a good time to set their expectations and answer lingering questions. We’ll usually have a definitive answer for you after this introductory call.

You’ll be required to coordinate with the founder and pick a slot in the calendar that works for everyone. Scouts should join a call whenever possible.

What happens after Wefunder approves a company?

After Wefunder approves a company for fundraise, we help the company prepare the required legal documentation and profile pitch required to launch. This process typically takes 3-4 weeks depending on the diligence and preparedness of the company.

There are two key parts to launching on Wefunder: Compliance and Profile. Compliance requires the company to fill out all information required in the Form C. The Form C is a synopsis of the offering filed with the SEC prior to fundraising and includes disclosure of company risks, investment thresholds, GAAP financial statements, and a statement of general financial condition. It is in our best interest to handhold companies through this process, and we do our best to make it easy, but it does require 1-2 days work from the company or their attorney. You can view all the required disclosures here: wefunder.com/company/set_terms.

Wefunder also helps approved companies build their profile. This begins with a one-hour interview with the founder which is then transcribed, edited, and becomes the bedrock of the profile. Wefunder will then return a 95% complete profile to the founder for a fact check, editorial review and general feedback.

The phone call handoff (during the approval process) is where your involvement as a Scout largely ends. Though, in order to keep you informed on the launch progress, we will copy you on the majority of founder/Wefunder communication. You will only receive payment when a company launches on Wefunder.

What is the general timeline from handoff to launch and payment?

The following is an average to-do-list and timeline for companies on Wefunder. Every company is different and launch speed largely depends on the determination of the founder. Companies with proactive founders can launch as fast as three weeks, while others will run into complications or strategically wait months before launching on Wefunder. You’ll get paid as soon as the fundraise goes live.

• Phone call or email introduction (1 Week): This is typically when we make the final decision. If the company is a ‘yes’, Wefunder will offer our white glove experience, building the profile and compiling the Form C on behalf of the company. If we decide the company isn’t the right fit for the white glove service, we’ll gently usher them toward our self-service option. (In this situation, you do not get paid.) Often a company is premature but has potential. We’ll make this clear and you should follow up with them in the future as they grow.
• Form C preparation, GAAP financials, and profile creation (2-3 weeks): Companies must fill out all the information required at wefunder.com/companyname/set_terms. These disclosures are a legal record of financial information and risks of the business. As such, we require in-depth answers.
• Final Form C and profile review (2 weeks): To ensure all forms are ready for the SEC and the profile is 100% factually correct and polished for launch we take several weeks to review everything. It then takes us several days to officially file and launch the company for fundraising.

Be aware that sometimes companies fall out of the pipeline. This happens for many reasons. Some have different, more urgent priorities, get overwhelmed, or just aren’t the motivated founders we thought they were. Others find alternative financing means outside of Wefunder. To mitigate this disappointment please be upfront about the workload and timeline for launch on Wefunder. Aligned expectations provide a better experience for everyone.

Will I be looped in during the launch process?

Yes. We plan to copy you as the Scout on the majority of communication between Wefunder and founders so you can remain in the loop.

How should I interact with the founder and Wefunder post hand-off?

You should act as a silent observer. We’ll copy you on the majority of communication between founders and Wefunder to keep you in the loop. Please refrain from jumping in. Take this opportunity to learn as much as possible about our process.

Can I promote the campaign once it goes live?

Yes! We encourage it. And you stand to benefit because the better your referrals perform on Wefunder the more likely we are to accept companies you refer in the future. You must follow a strict set of rules for advertising: https://wefunder.com/faq/launch-guide#launch-legal.

What is my relationship with a company after they close?

Hopefully, you consider investing in the company, but you’re not required to maintain a relationship with the founder after they launch on Wefunder. Founders do tend to know other founders and it is prudent to network with a founder to help prospect for more deals. Be sure to wait until they’ve had an exceptional experience on Wefunder before asking for leads.

Can I email Wefunder?

You are welcome to email support@wefunder.com with specific technical questions. Questions related to the scout program and company qualification should be posted in the Scout Forum so everyone can benefit from the answers.

Getting Paid

What are the three payment tiers?

Our referral fee ranges from $300 to $2,500. We notify you of your payment amount after the introductory founder phone call. We calculate this fee based on two criteria:

• The probability that the company will have a successful fundraise on Wefunder.
• The quality of the investment.
• The status of the lead.

	Probability of Success / Investment Quality
	High	Medium	Low
Sold Founder w/ Lead Investor	$2500	$2000	$1000
A Sold Founder	$1500	$1000	$500
Warm Introduction	$1000	$600	$300

How do I earn ‘Warm Introduction’?

Founders should be aware of who we are, should be actively (or soon to be actively) fundraising, and open to the idea of Regulation Crowdfunding. Your responsibility is to first submit the company to https://wefunder.com/scouts/refer. If approved, you’ll then introduce founders to the Wefunder team or schedule a 20 minute phone call with Scout, founder, and Wefunder.

If we decide the company has a low, medium, or high probability of hitting $100,000 on Wefunder, we’ll actively work to convince founders to use Regulation Crowdfunding and funnel them through our white glove launch experience. If we don’t have this confidence, we’ll provide them all the tools to fundraise on Wefunder with slightly less hand-holding.

How do I earn ‘Sold Founder’?

The founder(s) should be all in and ready to begin the launch process on Wefunder. We are happy to address any technical or highly specific questions you weren’t able to answer.

If we decide the company has a low, medium, or high probability of hitting $100,000 on Wefunder we’ll funnel them through our white glove launch experience. If we don’t have this confidence, we’ll provide them all the tools to fundraise on Wefunder.

How do I earn “Sold Founder with Lead Investor’?

We pay higher fees for higher quality companies. Having at least one lead investor investing a minimum of $25,000 at the same terms as future Wefunder investors is a tangible measure of quality. The investor must be unaffiliated with the company, e.g. not a team member or family. Sweat equity doesn’t count. We’re looking for experienced investors whose investment is a measure of confidence and extensive due diligence.

How do I get paid?

Currently we use Gusto.com to pay Scouts. When you launch a company on Wefunder we’ll send you sign up information for direct deposit and send the money your way within ten days of the company’s launch.

Can I split my Scout payment with others who help me?

Yes. You are free to reward those who help you source deals at your own discretion.

How do I earn the monthly stipend?

We no longer pay the monthly stipend. We’re increasing our payouts shortly to incentivize quality over quantity.

How do I know if I’m doing well?

There are several quantifiable measures of performance. First, the number of ‘yes’ companies per month. The highest performing Scouts currently submit 2 high quality deals per month. We prefer a few high quality companies that stand to raise a lot of money over numerous lower quality submissions. Two high quality deals that raise $500k each are far better than 20 companies that raise $50k each. Take stock of how well your companies perform on Wefunder. We’ll soon have a functional leaderboard and a compensation system to benefit quality over quantity.

There are also less tangible measures of performance. Founder feedback on Scouts is important—keep founders happy. Engage with other Scouts rather than pinging Wefunder directly. You are a community and well of knowledge for one another.

Also, invest in the companies you submit. This is a clear sign of your confidence in the launched company and that you have performed your due diligence.

Can I earn a percentage of funds raised?

Not yet. For legal reasons we aren’t currently allowed to pay Scouts a percentage of funds raised. We plan to offer this feature to top performing scouts in the near future. We hope good scouts providing high quality investments will make 5x - 10x what they’re currently earning. Read more about funding portals here: https://wefunder.com/funding_portal. If you successfully submit 3 companies to Wefunder you can apply for our pilot program.

Can I have my own page on Wefunder?

Eventually, top performing scouts that apply and become funding portals will have their own page on Wefunder. Submit at least three high quality companies that successfully launch in order to be considered.

Common Founder Questions

What does Wefunder help with? How much marketing does Wefunder do? Are these people on the site venture capitalists?

Wefunder provides all the means to run an equity crowdfunding campaign. Companies can build their profile, file their required Form C, select a security, and launch the campaign all with our out-of-the-box software. You can raise as little as $100 from anyone, regardless of income.

For the highest quality companies we provide a white glove experience to ensure the launch is as easy as possible and the fundraise is successful. Wefunder will help the company with the Form C and file on their behalf. We provide free out-of-the-box securities designed specifically for crowdfunding. We also cover all escrow and banking fees for all investors. Our in house pitch team will design, write and code the entire profile on the company’s behalf to ensure conversion is maximized.

We will also provide marketing consultation as well as market the offering to our investors (we oblige by an objective set of marketing criteria). We currently have a pool of ~4,732,804 investors on Wefunder. The better a campaign performs (the faster and more a company raises), the more exposure they’ll receive to our investor community. Our investors range from former and current VCs writing $100k checks to first time investors investing $100, they span professions from doctors to teachers to unicorn founders.

Post fundraise interaction between company and investors is as important as the capital itself. Wefunder has all the tools necessary to foster the company / investor relationship and allow founders to communicate with their new team of hundreds of investors to help the company grow.

What kind of annual accounting/compliance has to be done if we raise money like this?

Companies are required to file an annual financial report. If they don’t, they will not be allowed to crowdfund again until their annual reports are completely up to date.

How long do campaigns go for?

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.

Campaigns must be live for at least 21 days. The maximum time you’re allowed to stay open for fundraising is six months. Most campaigns last approximately 10 weeks.

Don't all those investors hurt the cap table?

Hurting the cap table is a misnomer. Cap tables aren’t technically hurt with more investors. Granted, there is a stigma against larger cap tables in early stage financing because more investors mean more people with a vested stake in a company’s success and therefore more people liable to sue if things go wrong. We don’t believe several hundred small-dollar investors exposes a company to any more risk than ten investors at $100k each. In fact, we think there’s less risk on Wefunder because a $500 investor has less incentive and likely fewer resources for legal recourse if the investment goes downhill.

What are the risks with using Regulation Crowdfunding?

There are concrete risks companies should be aware of:

• Venture capital firms, or other institutional investors, can be averse to large cap tables. We mitigate this risk with a buy back provision in our contracts: companies can buy out investors prior to follow on financing if their Wefunder investors are a significant disruption to the deal.
• Voting and signature rights. Companies don’t want to collect hundreds of signatures or votes when making critical decisions. To ensure this isn’t necessary after using Wefunder, we’ve designed our contracts to proxy voting and signature rights to one single lead investor. Companies need only get one signature or one vote on behalf of hundreds of Wefunder investors.
• Read more about our custom crowdfunding securities here: https://wefunder.com/faq/legal-primer#wefunder_safe. Companies can use these free boilerplate contracts or have their lawyers adapt them as needed.

What does a campaign typically raise?

It depends on company goals, most companies don’t strive for $1MM. Many cap their fundraise at $100k because they only need so much capital and don’t want to dilute their shares more than they’d like. View a full list of fundraising totals here: https://wefunder.com/stats/all

How do we determine our investor contract? What works best for me?

A company’s fundraising security is potentially the most important part of their deal. There are endless contract options floating in the world of private fundraising and companies are welcome to use any security they wish. We do have several out-of-the-box security types that companies can use free of charge here: https://wefunder.com/faq/legal-primer#wefunder_safe. We’re also happy to consult with founders to determine which security and payback schedule is most appropriate for their business. Some high level options include:

• Revenue share. The debt security is effectively a loan tied to growth and doesn’t require the company to sell any equity.
• Convertible security. Convertible financing is most popular among early stage companies because it’s affordable, simple, and punts the headache of equity contracts to the next institutional round when a large investor can help sort out all the details of equity. Typically investors won’t get paid until the company is acquired or goes public with an amount reflective of their ownership percentage at the time.
• Equity. Similar to convertible security types but investors are buying actual shares.
• Equity / Profit share. Especially popular in the restaurant industry, this security type grants investors equity and a percentage of profits (paid quarterly or annually). This is great for companies that don’t see an acquisition in their immediate future and want to reward investors along the way as they grow.

Why did you mail us in particular?

This question should be answered in the initial outreach email. Ensure your outreach is highly personal. Spam gets ignored for good reason.

I want value add investors not just a bunch of $100 checks.

Wefunder can help companies raise a tremendous amount of capital with ease. The real value in equity crowdfunding isn’t the cash though. The value add is inherent in the size of your investor base. Rather than several wealthy investors who consider the company a line item on their portfolio, Wefunder investors are motivated by the experience of aiding the companies they invest in. Companies can leverage this new team for recruiting, industry introductions, to announce a new product launch, etc. We’ve only just scratched the surface of what’s possible when a brand has hundreds of brand ambassadors and can’t wait to see the advantages the crowd can provide to companies on Wefunder. Check out this Facebook group started by Legion M as an example.

The timing is wrong. We don’t need funding right now.

Companies should definitely be ready and excited for fundraising. There are a number of reasons why companies don’t want to or shouldn’t raise capital. Fundraising either dilutes a company’s cap table or adds debt that they must repay. In other words fundraising isn’t free. Also, as much as we’re trying to ensure fundraising on Wefunder is as easy as possible, there’s still work involved that companies should be aware of upfront. Lastly and perhaps most importantly, fundraising with a goal in mind is a sign of a competent founder. We should never push a company to fundraise that isn’t prepared and enthusiastic to do so.

That being said, growing companies will likely need funding in the future. Try and figure out a founder’s rough plans for expansion and when / if they’d consider raising outside capital or take a bank loan. You’ll want to reengage just prior to this planned effort.

Why is Wefunder better than their competitors?

There are a number of reasons Wefunder is the best fit for Regulation Crowdfunding:

• We’re cheaper. While it may seem that some companies charge only 5%, there are hidden costs. All our competitors charge for a litany of other services above and beyond the price they advertise on their websites. These services include banking and escrow fees, refund fees, bounced check fees, Form C filing fees, the inevitable future cost of paying out investors, profile and pitch fees, etc. In fact, we’re not aware of any competitor that can run a campaign for much less than an aggregate 10%. Wefunder doesn’t charge anything up front. We only charge 6% when a company is successful: 4% as cash and 2% of funds raised as equity. We do it this way to earn cash to keep our doors open in the short term while also aligning our incentives with investors. This 6% includes everything: banking, form c filing, and the help of our design and pitch team to design, write and code a completely custom pitch specific to the company in question and their vision for the future.
• Better storytelling. It can be difficult for founders to translate the gravity of their idea and the potential success of the business—especially to investors unfamiliar with the problem they’re solving. We’ve raised money for approximately 150 companies. This experience has given us the unique ability to help founders translate their vision to investors.
• Post investment experience. The relationship between founders and investors post investment is perhaps more important than the capital itself. Companies will have hundreds of people literally invested in the success of their business. We’ve created and are perfecting tools for founders to engage this community. We’ve only scratched the surface and can’t wait to see how more companies benefit from this relationship. Imagine a recruiting team of people all over the country, hundreds of voices to help with product feedback and launches, a rolodex of possible introductions, etc.
• Higher conversion. Converting investors once they hit the profile is crucial. It doesn’t matter how many potential investors a company has on their list if they don’t press ‘invest’ and connect a bank account nobody is raising anything. Due to our storytelling, the fact that we’re an investment portal, and our seamless checkout design, investors can sign up and invest in less than a minute on Wefunder. Convert more investors faster on Wefunder.
• More investors than any other platform. More of Wefunder’s users have actually committed investments than on any other platform, 10,000+ are active investors and another 80,000 are just waiting for the right deal.

Scout Resources

How do I get more involved with Wefunder?

Top performing Scouts will be given many more opportunities to get involved with Wefunder, earn more money, and eventually be considered for full time employment if desired. Here are a few of the opportunities offered to top performers:

• Personal, one-on-one training with our fundraising team including our President and Director of Fundraising.
• Consideration for Portal status. This means you’ll have your own investment portal hosted on Wefunder—think of it as your own online VC organization—that will allow you to earn a percentage of funds raised and increase your earnings by up to 10x. Read more here: https://wefunder.com/funding_portal

To be considered for your own investment portal.

• Be active in the forum. Ask questions, pose topics, help other scouts.
• Submit high-quality companies often. Performance matters: show us you can drive quality deal flow.
• Educate yourself and become a source of knowledge for potential founders. The more questions you can answer, the more confidence you demand, the more high quality companies you’ll be able to funnel to Wefunder. You should strive to be as knowledgeable as the Wefunder team about Regulation Crowdfunding.

How can I learn more about the law?

We have a variety of resources to learn more about Title III and IV:

• High level guide on the regulations: https://wefunder.com/faq/legal-primer
• The Strengths and Dangers of Investment Crowdfunding
• Lobbying letter to Congress for Fix Crowdfunding Act
• Guidance on communication and advertising during a campaign
• Terms Lexicon
• Chart to compare Reg D, Reg A, and Reg CF

Is there a way for me to view and learn from the most successful companies?

You can view a top to bottom list of the most successful crowdfunding offerings here: https://wefunder.com/stats/all. We encourage you to constantly monitor this list and measure what it takes to be successful for Reg CF campaign.

How do I provide feedback to Wefunder?

We always welcome and encourage feedback in the Scouts forum.

Do you have more materials for training aside the FAQ?

We do! Here is a list of training materials:

• Scout Guide
• Learn more about general Wefunder process here: https://wefunder.com/faq
• Our blog and philosophy: https://blog.wefunder.com/
• More about Wefunder’s history: https://wefunder.com/wefunder

We are working hard on more training materials which will soon be tied to compensation. If you have any ideas for better material please post them in the forum.

Can I be disqualified as a Scout?

We reserve the right to disqualify any Scout for any reason. You can count on disqualification if you:

• Frequently provide misinformation to founders.
• Represent your role at Wefunder dishonestly.
• Offer kickbacks to founders for using Wefunder.
• Make false promises.
• Spam founders.
• Ignore feedback from Wefunder.
• Consistently submit poor quality companies.