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Wefunder Blog

Introducing Funds, Part 4: What if I am unaccredited?

on Aug 29 2018
Founder & CEO @ Wefunder
This is part 4 in a 4 part series introducing Funds
  Part 1: A quick overview!
  Part 2: Why invest?
  Part 3: Why be a partner?

The original inspiration for Funds came from our desire to help unaccredited investors (those who earn under $200k or have under $1m net worth) make better investments.

We started Wefunder because we strongly believe in the "wisdom of the crowd" to fund more deserving companies. When the law changed in 2016, we were excited to see it actually work:  everyday people - over 75% of which invested less then $500 - have invested close to $50 million in the businesses they know and love.

We think it's a great signal of a potentially good investment when a couple thousand customers of a brewery like it so much, they'll log into Wefunder and invest $200.  

However, it's not enough. Since the median investment is a few hundred dollars, no one is incentivized to spend time looking into the details.  For instance,  is the brewery worth a $5 million valuation? Can they finance their debt load? Have they grilled the founder and gotten a sense for if they have what it takes to succeed?

The initial inspiration for funds was to fix this.  Can we incentive a group of experts to look into those details?  What if a team of a dozen brewery CEO's - perhaps a few who sold their breweries  - could interview the founders, take a look at the financials, do their research, and decide whether or not to invest themselves?  What if they could provide a "due diligence" report to all of the unaccredited investors, along with how much money they were personally investing?  Best yet, what if these experts were also incentivized over the long-term to help these breweries succeed?

For complicated legal reasons, we believe funds is the only practical way to financially incentive experts to spend the time to do this.

We believe that Funds will source and vet companies that list on Wefunder with a Regulation Crowdfunding campaign.  When this happens, unaccredited investors that follow those funds will get a "due diligence" report, and they can decide whether to invest more themselves.

We do think it is a shame that the law currently prohibits unaccredited investors from investing in the fund itself.  Thankfully, that will get better change soon.  In July, the House of Representatives passed a bipartisan bill (406 to 4), which would let anyone take a test to become accredited. We hope this will become law in 2019.

Until then, unaccredited investors can follow the funds they are interested in and get notified when they can legally make an investment in a startup the fund picks. 

Or, if they have expertise in a particular area, they can apply to join a fund as a partner.

In the meantime, Wefunder will continue to fight for Congress and the SEC to reform our securities laws, so that unaccredited investors can have the same investing opportunities that the accredited enjoy.

This is part 4 in a 4 part series introducing Funds
  Part 1: A quick overview!
  Part 2: Why invest?
  Part 3: Why be a partner?

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