Mid-2020 Investor Update
I'm proud of the Wefunder team for executing despite tremendous hardship.
Despite Covid-19, the recession, and being forced to work at home under Shelter-in-Place, Wefunder has doubled over the first half of 2020 on most metrics.
- 2X Revenue Growth: ~$2M YTD. We earned about $1M the first half of 2019. We earned about $2M the first half of 2020.
- $6M Revenue Run Rate. Revenue is accelerating. We earned $500,304 in June.
- Profitable. We're profitable over the last quarter. We ran a very small loss over the last 6 months, as spent $30ok in one-time legal fees to invest in our cap table solution.
- 2X Growth in Startups in Pipeline. We've doubled the number of startups in our pipeline. Over 170 startups are working on launching their campaigns.
- 2.25X Growth in Startups Launching Campaigns. We launched 55 startups in the first half of 2019. We launched 126 the first half of 2020.
- $30+ million Deployed in First Half. This is about 1.6X year-over-year from the first half of 2019. We expect this to accelerate.
- 35,000+ Investments; Recession Had No Impact. Over 35,000 investments were made on Wefunder since the pandemic started. There is no correlation between increasing unemployment or stock market declines to our investment volume.
- $4 billion of follow-on financing backing the Wefunder portfolio. We updated our IRR page with the financial returns on startups using Wefunder in 2013-2016. We're proud of the objective stats that prove that the best startups use Wefunder.
- Product Improvement: Custodians. As of May, Startups that launch on Wefunder now have one entity on the cap table. This was by far our biggest barrier to growth.
- Product Improvement: Lead Investors. Every future startup on Wefunder must have a Lead Investor who vets the startup, personally invests their own money under the same terms, and fights for the interests of investors on Wefunder. A Lead Investor earns the equivalent of 5% carried interest.
- Product Improvement: Investor Panels. Every future startup on Wefunder must be interviewed for 10 minutes on Zoom by three experienced investors with expertise in that domain. This interview is public to investors on Wefunder.
- SEC Reforms Released. The SEC issued reforms in May that allow startups to launch on Wefunder and accept non-binding commitments without financials.
- Next SEC Reforms Likely by End of Year. We wrote a 22 page comment letter to the SEC on their proposed capital formation rules. Among many things, this will increase the annual amount that startups may raise under Regulation Crowdfunding from $1 million to $5 million per year, which would dramatically increase our revenue.
- Fully closing out our $50M round in mid-July. We had an initial closing of a priced round at a $50M pre-money valuation in December. We will have the final close of this round in mid-July. We'll then increase our valuation substantially for our next raise. (Our closest competitor, StartEngine, is raising at a $190M valuation).
Over the remainder of 2020, we plan to:
- Accelerate Growth Past 2X. We spent the first half of 2020 spending most of our energy on building a stronger foundation. In the last half of 2020, we plan to use this foundation to grow faster.
- Hire Designers, Marketers, and Engineers. We're behind on our plan to recruit a product team. We paused recruiting when the Bay Area first went under lockdown. We're now actively recruiting 3 designers, 2 marketers, and 2 engineers immediately. This will allow us continue to improve our product to be world-class.
- Release Investor Portfolio Web Page with IRR Calculations. We're also behind on our plan to show each investor their personalized unrealized returns. All of the engineering work has been done. It's now a massive data collection project for the 500+ startups that used Wefunder.
- Modernize User-Facing Web Site. For the past four years, almost all of our engineering resources has gone into internal tooling to help us overcome a huge operational burden. As a result, our user-facing web site has stagnated since 2016. We plan to lay the groundwork in 2020 to completely revamp Wefunder by mid-2021.
Asks for Help
- Lead Investor and Referrals. If you'd like to serve as a Lead Investor for a startup you are working with, please email email@example.com. For each referral, we give the Lead $1000 to invest plus the equivalent of 5% carried interest.
- Investor Panelist. If you'd enjoy interviewing the founders that want to launch on Wefunder for 10 minutes - asking hard-hitting questions - please email firstname.lastname@example.org.
- Recruiting. If you know of any super talented people that may enjoy working with Wefunder, please refer them to our jobs page.