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Wefunder

State of Wefunder, Q2 2020

on Apr 15 2020
Founder & CEO @ Wefunder

Dear Investors,

This is one of those rare times when things went better than expected.  That likely means we are soon due for a punch to the face.  But right now, things are great.

Highlights

  • Q1 2020 was our best ever in every growth metric.  We had the most investments, new investors, and dollars invested ever.  
  • March 2020 was our best ever in every growth metric. While the stock market was crashing and unemployment went past 10%, over $5.5M was invested in March.
  • We added 4 new team members.  We've hired 2 former YC founders and another BD hire.  Jiwon Moon also came back to head up community.
  • Startups now have one entry on the cap table.  We've finally figured out how to get one entity on a cap table to represent the crowd, and have a single lead investor direct the vote of the securities.  We are launching this on May 1. (We've spun up an SEC-registered transfer agent that can hold securities in "street name" on behalf of  "beneficial owners".).  This is a very big deal for our growth.  
  • Our pipeline of companies has increased 40% month over month.  Thanks to both having one entry on the cap table - combined with the crisis - a lot more high-quality startups are looking to use Wefunder.  
  • We made progress on solving operational problems.  We've built a lot more tooling to either prevent problems, or help our ops team handle them without engineering involvement.  We're not where we need to be yet, but I expect a significant improvement to be noticeable over the next couple of months.  
  • Made Progress on K1's and Returns.  We updated all of our fund investments and issued k1's almost on time (a few were a week late).  We are almost done with a massive data collection project that will roll out estimated returns for every company funded on Wefunder.  
  • We had over 2500 companies apply to our Fight the Virus Challenge.  Besides being inspiring, we expect many of the best of these companies to launch crowdfunding campaigns. 
  • The SEC issued proposed reforms.  Among many needed reforms, they will increase the amount startups can raise from $1 million to $5 million per year.  
  • Inspiring Covid response.  Our team switched priorities 180 degrees in days after it became obvious we were in a once-in-a-generation-crisis.  I wrote this private letter to the team (I didn't make it public).  How everyone has risen to the occasion to do their best to make a difference is inspiring.


Going Forward

  • Nail the inflection point.  Our solution for one entity on a cap table - led by a Lead Investor who can earn performance-based compensation - is expected to triple the number of companies we launch per week over the summer.  We are focused on making sure we can support this smoothly. 
  • Hire designers & engineers.  We made less progress in Q1 on hiring.  We are still actively looking to build up our product team.  
  • Continue to evaluate the economy.  One big question mark for Wefunder is what happens in a recession or depression.  It was always obvious that we'd get more companies that want to work with us. The question is, will investors continue to invest?  So far, they have been, to an extent that has surprised me.  However, when things are too good to be true, I continue to  treat things skeptically.   There is no guarantee that investments will continue as unemployment ramps up to 20%.  We are swimming against the tide by actively hiring as everyone else is running for the hills.  We'd have to respond instantly if our revenue starts decreasing. However, we have enough cash in the bank - and a low enough cost structure - to survive into 2021 in a worst case scenario. 

Ways to Help

Please refer any engineers or designers to our jobs page:  https://wefunder.com/jobs

Please consider investing in our Pandemic Fund.  We're in the process of selecting the top 1% of startups that applied. https://wefunder.com/fight-the-virus/top

I'll end this update with our team the week before SF went into lockdown:

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