This was originally written on May 15, 2012. It has been a long wait, but on May 16th, 2016, the final rules for Regulation Crowdfunding go live. I find it amusing it took 4 years almost to the day. I'm also gratified that we have stayed true to our initial vision. This is all true now as it was then.
Here's an embarrassing fact: last November, when I heard about the crowdfunding legislation in Congress, I thought the entire concept was idiotic. I envisioned thousands of scammy 'investment opportunities' posted on an eBay-like site, milking unsophisticated investors. Or, on the other side, I saw start-up founders struggling to manage hundreds of investors (along with a few crazies!)
Luckily, the story didn't end there - I couldn't shake the idea out of my head. I'm foremost a startup founder, but I always WANTED to invest small amounts of money in my favorite startups. I imagined there must be many people who would love to place small bets, backing new innovations they felt important. Wouldn't it be cool to have that feeling without needing millions of dollars?
I don't feel a sense of meaning when I buy a share of IBM - it's purely a financial transaction. But startups? If I could support entrepreneurs trying to change the world, and still have a chance of earning a return... well, that's value beyond money. I could give back. And that's the key to making crowd investing work.
After letting the idea stew for a couple weeks, I still thought there were hard challenges, but they began to feel solvable. So, in January, we decided to give it a go, and start Wefunder.
We were all drawn to work together on Wefunder because we share similar ideas about how we want to impact the world. Our goals are to:
Give everyone the opportunity to invest in startups. Anyone who is passionate about a new business should have the right to invest. Previously, only the wealthy and well-connected had that opportunity. Take Facebook. No offense to Peter Thiel, but we believe society would have been better served if thousands of early Facebook users had also provided the seed capital... and reaped the rewards.
Connect startup founders with hundreds of evangelists. Investing in a new business is not only about providing money. It's about helping a founder impact the world. We believe that startups will unlock tremendous value from hundreds of their most passionate fans... who will help with product feedback, connections, and evangelism.
Direct more capital to deserving businesses. Venture capital is not enough. VC's invest ~$15 billion dollars a year effectively... and those investments meet a tight criteria of exiting at over $100 million dollars within 5 years. On the other side, banks don't take enough risk to support small business.
The principles behind everything we do include:
Quality, not quantity. We strive to be proud of every company featured on Wefunder. We refuse to build an eBay-like listing service. We will set a high bar for businesses that impact communities or the world and curate accordingly. We will sacrifice short term profits for long term impact.
Investors come first. We can best serve startups by building a community of investors who are passionate about helping startups. We will always consider the perspective of the entrepreneur (we are founders, after all!), but our priority is given to the investors who help us all follow our dreams.
Intense devotion to detail. Foremost, we're focused on building the best product possible. Good products are the cumulative sum of thousands of small details, done just right, covering every aspect of the user experience. Is something not perfect? Let me know.
Markets make better decisions. We believe the "wisdom of the crowd" - guided by industry experts - will make better curation decisions than professional investors alone. If we allow crowd investors, experts, and fans to collaborate effectively, we can allocate capital to deserving new businesses more efficiently than traditional investing.
Seed investing is not only about returns. We believe helping a founder create value for the world should be the primary motivation behind investing in start-ups. Otherwise, stick to the NYSE - early stage investing is too risky. I personally will view my investments as 'socially good' lottery tickets. If I do enough of them, I might earn a return. But, either way, I'll have the satisfaction of helping give many deserving ideas a shot.
If investors do poorly, then so should we. Our incentives should be aligned with the crowd investors who use our platform. If the average return across all deals is not positive, then we should not be earning massive profits. Further, we should advocate for the rights of seed investors during follow-on VC financing, as if we were a shareholder ourselves.
Investments are open to those who care the most. Investors should not be restricted based on social connections or wealth (other then required by law). If a 'hot deal' has more demand for investment then can be filled, those who care the most - and want to help - should be given priority.
Wefunder is the most fulfilling startup I've been apart of. I've never worked with a more skilled team of cofounders. I've never been as excited about the potential impact on the world. I abhor the words "revolutionary" and "game-changing" (unless Apple uses it!), but in this case... I feel it.
It's going to be an exciting journey, and it's only just started. Want to join us? Have any thoughts? Email me at email@example.com
588 startups have raised $233,288,039 on Wefunder
Wefunder supports three different federal laws that allow startups to raise money legally. To comply with the law, Wefunder Advisors LLC and Wefunder Portal LLC (both owned by Wefunder Inc) also list startups depending on the regulation used.
Legal May 16th 2016
Wefunder Portal LLC
for 497 startups
Wefunder Advisors LLC
for 136 startups
for 3 startups
Curious how well the companies have done? Or how many raised follow-on financing?
Some fine print: 1) These numbers include startups currently live on Wefunder if they pass their minimum target. 2) Some startups use two different laws at the same time (i.e., Regulation D and Regulation Crowdfunding).
wefunder.com is a website owned by Wefunder Inc., the parent company of Wefunder Advisors LLC and Wefunder Portal LLC. Wefunder Inc. operates sections of wefunder.com where certain Regulation D and Regulation A+ offerings are available. Wefunder Inc. is not regulated in any capacity, is not registered as either a broker-dealer or funding portal, and is not a member of FINRA or any other self-regulatory organization.
Wefunder Advisors is an exempt reporting adviser that makes filings with the SEC and certain states. Wefunder Advisors advises special purpose vehicles (SPVs) used in certain Regulation D offerings that are available on wefunder.com.
Wefunder Portal is a funding portal (CRD #283503) that is registered with the SEC and is a member of FINRA. Wefunder Portal operates sections of wefunder.com where certain Regulation Crowdfunding offerings are available.