We have carried interest stakes in most companies funded via Regulation D.  Our IRR is over 40% from 2013 to 2016: https://wefunder.com/results

However, we discounted our fees in the beginning.  For instance, Zenefits was the first company we listed on Wefunder, and as such, we charged 0% carry. If we had invested $150k at 20% carry, the value of our carried interest would have been $1,260,000 18 months after we funded them.

Our past portfolio speaks for itself on our previous success in Reg D. We must continue to attract high-quality companies for Regulation Crowdfunding.

First, it's important to define "high quality". It does not mean that companies are like Zenefits, offering investors a 4000%+ return in two years. To us, high-quality means deserving businesses with legitimate founders who can grow profitable companies. A donut shop that offers a return to their investors qualifies.

It also typically means businesses who also can raise with Regulation D from professional investors. That is, they have other financing options.

Our biggest strength is that we've spent years immersed in the Y Combinator startup culture, so we intimately understand how founders who have leverage against investors (as their startups are highly sought-after) think. When we take this understanding to the "real world" outside of San Francisco, we expect to blow away the competition.

Customer service: save founders time
An obvious truism is that successful founders with other financing options don't want to waste a lot of time. So we do nearly all the grunt work for them. We schedule an hour interview, ask for some disclosures and assets, and then hand them a fully-fleshed out fundraising profile and "Form C" SEC filing for their review and approval. Our customer service is key.

Companies with other options won't pay an obscene amount
Another obvious point is that high-quality companies don't need to pay to get funded. Our competitors - typically the ones with a broker/dealer finance background - who charge over 10% of the round will not get the best companies.

We currently charge the company 7.5%. In our experience, companies can justify this cost in return for the marketing value of having their customers be investors. We will continue to drive down company costs as long as possible and take more of our compensation in the same form as our investors, so our goals and interests are aligned.

(We also charge $0 for a "Form C" instead of the up to $5000 of some of our competitors).

Companies care about "signaling"
Finally, working with credible companies is a virtuous cycle. High-quality companies want to be funded alongside other high-quality companies.

Think about the difference between Y Combinator and Techstars. Most credible startups apply to Y Combinator first, and only go to Techstars if YC rejects them. It's much more prestigious to be in YC.

We understand follow-on financing
Another great benefit of being immersed in Silicon Valley for years is that we intimately understand the issues around follow-on financing when the venture capitalists come aboard. So we pioneered new crowdfunding securities to ensure that companies don't shoot themselves in the foot if they are successful. Our competitors don't do this to the same extent.

Our costs are lower than our competitors', and we want to pass on the savings so we can fund more higher-quality companies.

We're a "full stack" software and nearly entirely vertically integrated. We outsource almost nothing. This was an intentional decision as we knew we had to drive down costs to make thousands of investors cost effective. We wanted to control the user experience.

We spent four years writing software to automate nearly everything. For instance, we wrote our own electronic contract signing software, ACH payment transfer software, investor management software, accounting software, SEC filing software, and are now working on tax filing software.

We've partnered with a bank for on-demand escrow accounts at nominal cost and CPAs to offer independent reviews to our clients at nearly 20% of the market rate.

We've also worked with our lawyers at Wilson Sonsini on legal structures that limit some franchise taxes and other unnecessary costs. Finally, we operate as an exempt reporting investment advisor and funding portal, limiting compliance costs that broker/dealers are burdened with.

AngelList and FundersClub have been our two most credible competitors from our founding in 2012 to May 16th, 2016, when Regulation Crowdfunding is implemented. After May 16th, we moved in a different direction.

FundersClub is an "Online VC" that crowdfunds its limited partners from accredited investors. They have no plans to pursue unaccredited investors, expand to small businesses, or be a self-service fundraising platform, like we intend after May 16th. They are our competitor much the same way Union Square Ventures is our competitor.

AngelList is a beautiful web site for accredited investors who know the "inside baseball" game in Silicon Valley. It's perfectly designed for professionals. It's also the "operating system" for startups, with a number of useful services

We've always known that we were competing with AngelList and FundersClub in the short-term (although we didn't expect it would take 4 years for the SEC to implement Regulation Crowdfunding!). For the past four years, we've kept true to our vision of a more "Kickstarter" vibe. We're designed to appeal to and educate non-professionals on how to invest, where anyone can invest as little as $100 in both startups and small businesses. Our competitors - even those who started because of the JOBS Act - iterated more and more towards the accredited market.

Competitors include StartEngine, SeedInvest, Indiegogo, and NextSeed.

The results speak for themselves. We're larger then all other funding portals.

Our biggest strength is that we know what is takes to find and work with high-quality companies. We've already proven that we can attract high-growth, high-profile companies to crowdfund from accredited investors (i.e., Zenefits), and now we're doing it again for Regulation Crowdfunding (i.e., Beta Bionics).

Another strength is that we've spent four years working on software that drives down costs and is simple and easy to use for both investors and founders. We're not finance people, we're product people. Our product isn't about just taking a cut, it's about relationships and emotion. Wall Street doesn't do that.

If you ask this question, you don't understand our ambition. We're talking about turbo-charging the entire economy. We want to accelerate GDP growth by making us a nation of owners in the true engine of our economy: small businesses and startups. We want to explode the number of new businesses.

Our ambition is not to be a VC. We're aiming to create a new type of stock market that can allocate more capital to all sorts of worthy businesses, be it a local community-supported coffee shop or the next Uber. We want to create and dominate the emerging private/public hybrid stock market for new businesses, where it's accepted that these are riskier, longer-term investments (i.e., not the NASDAQ). We believe the "wisdom of the crowd" is superior to the judgement of a few gatekeepers like bankers and venture capitalists. Markets beat top-down decision making.

We also want to single-handedly increase the percentage of under 30 year olds that own stakes in private businesses from the current 3.6%, back over 10%, like it was in 1989. Entrepreneurship is dying in this country, outside of tech hubs like SF and NYC. We aim to revitalize capitalism for young people.

Our long-term vision is to create a new type of stock market for risky and early-stage companies, for long-term investments subject to investment limitations. We believe that informed investors can allocate capital more efficiently across our society than a few bankers or venture capitalists. Markets beat gatekeepers.

Unlike the NASDAQ, since it's expected by the public that these investments are far more risky (and as such are subject to investment limits), the burden of regulations are far, far less than that required by a company going public. Companies that refuse to go public until forced to do so (i.e., Uber) as a result of the burden of regulations imposed after Enron may consider a private/public hybrid stock market with a lighter regulatory regime.

The features of this stock market should include:

• Acceptance of risk with every purchase. Investors should affirm that they may lose all their money and afford to bear this risk with every purchase.
• Investment limitations. Investors should not invest more than the 5%-10% limit of net worth or income imposed by Regulation A+ or Regulation Crowdfunding.
• Proxy voting power to one person with fiduciary responsibility. Minor shareholders should appoint one representative - who may be on the board of directors -to advocate for their interests. The company only needs to deal with one person with sophisticated knowledge of their business, and the voting power of small investors is aggregated to increase their leverage.
• No daily price ticker; limited resale. The short-term focus to manage quarterly earnings is often detrimental to long term vision. We envision a stock market where companies can opt to allow resale on a secondary market only once per quarter or year.

The benefits to our society include:

• More capital goes to where it is needed most. Capital will be allocated more efficiently to a wider range of businesses. We expect an explosion of entrepreneurship. There are enough people in our society who want to support riskier ideas.
• We can start reversing the disparity of wealth. In the 1990's, it was a badge of honor for companies to go public, and they did it as soon as possible. Now they delay it as long as possible. This means ownership in the fastest growing companies are no longer available to people who are not rich. This is wrong.

We recently created a new brand:  https://xx.team/

We believe the best way to scale is to empower (and compensate) a community of founders that scout out, invest in, and help startups succeed, at the earliest stage.  

When these companies are then ready, they can use Wefunder to crowdfund from their users.

We've made it dead easy to invest in a company - it takes maybe 30 seconds to fully execute an investment and transfer the funds. Consider it a "one click Amazon-style checkout" for investing.

We've also created some beautiful software that lets founders highly customize how they wish to present their company to investors... and helps them generate and file a "Form C" with the SEC at a fraction of the complexity and cost of our competitors.

Next, we want to execute better on our long-term vision. The investment is meant to be the start of our product experience. We want to help people "feel behind the curtain" -- that they are making a difference in the world, that they can find ways to help their portfolio companies, be it by spreading the word about product launches, providing introductions to new hires or partners, or giving detailed product feedback.

We've been relentlessly pursuing our vision for seven years. We don't let anything stop us, starting before Congress even passed a law. We helped Congress write the sections of the JOBS Act that will enable all Americans to invest, were mentioned by name in the Congressional Letter of Intent, and were invited to watch President Obama sign it into law.

When we first started, we did not appreciate what we were getting ourselves into. Now we do. We were already proven product designers and software engineers... with MBAs. But we also needed to learn securities laws inside out, obtain our Series 65 and Series 7 licenses, and learn what it takes for investors to attract high-quality startups.

But, most importantly, we have seven years of hands-on, practical experience with raising money from accredited investors outside of SF, for some of the most-sought after startups in the country. We've learned a ton that will be applicable to Regulation Crowdfunding. It'll be very hard for others to catch up to us. We have a vision, practical experience, and a formidable will to make it happen.

Initially, we built this for ourselves. We wanted to make investments in our friends (back before we were accredited).

One of Nick's best friends is angel investor Bill Warner, who founded a public company and sold another for about the same amount. He's inspired all of us: Bill spends practically all of his time helping founders. We wanted to be like him and help and invest in our startup friends. But we didn't have $50k to invest in each company... we had more like $500. Plus, it was effectively illegal for us to do so. We thought that was stupid.

We’ve always wanted to invest in founders we believed in. Not primarily for the financial returns, but to give back, to help, and to live vicariously through their experience. It made no sense to us that only the wealthy had the privilege to act on these emotions prior to the passage of the JOBS act. People are people; the dollar amounts are just smaller.

As we built Wefunder, we also learned that we could help our country by revitalizing entrepreneurship. It became evident to us how many deserving businesses can't get the capital they need to start or grow; the banks got way more risk-adverse after 2008, and venture capitalists pour money into a small sliver of the economy. We believe we can help fix that. The people who care should be allowed to allocate capital to businesses that need it.

We've spoken to thousands of investors on Wefunder. We were surprised to the extent that they were motivated by the same things as us.

We don't want to lose money, but we're not investing in startups primarily for the financial returns. We want to support things we believe in. We consider our startup investing to be socially good lottery tickets. We were surprised that even accredited investors with a finance background feel the same way.

We were also surprised that unaccredited investors (who apply to invest, but can't yet until May 16th) pick the same exact startups on Wefunder as accredited investors. There is no correlation between income and the startups chosen.

While we can build a profitable business under present law, our vision will not be fully reached unless Congress and the SEC further improve securities regulations.

We've worked with the Deputy Majority Whip, Congressmen McHenry, to help draft the Fix Crowdfunding Act that would greatly increase the potential of Regulation Crowdfunding. We've also been in touch with the offices of Senator Bennet, Senator Merkeley, and Senator Daines to support it in the Senate.

In 2019, Congress and the SEC are expected to reform equity crowdfunding to make it more appealing for startups and investors, greatly increasing our growth potential. The House of Representatives passed JOBS Act 3.0 406-4 (it's now in the Senate) which includes important amendments to Reg Crowdfunding. Concurrently, the SEC is revising the regulations in the near term. As the largest funding portal, Wefunder is best positioned to take advantage of these reforms.