Wefunder

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Looking to invest in a startup and you are not accredited Wefunder is one of the top platforms for this. They have leveraged close ties to Y Combinator and the leadership there. It is a crowd investing platform offering equity crowdfunding for non-accredited investors, or regulation crowdfunding, Regulation D, Rule 506b and Regulation A+ offerings. 

Portal Performance

According to their website as of Nov 2023:

• 3,184 founders funded or startups raised money
• $677M raised on Wefunder million raised
• More

Fee Details

A company can create a profile with Wefunder for free. Fees are only assessed after a successful raise. The structure of the raise for the team is are all-or-nothing. Funds are collected only if you meet or exceed the goal amount set at the outset. Each deal is required to report the fee setup with the SEC so we showcase that information if you are having issues finding it. 

Funding Structure

Be sure to read the docs for the structure of your investment as it can come in 3 distinct setups. 

Direct Investments
The company you invested in manages your investment. This means that their team will take care of anything you would need regarding this investment. "Although Wefunder isn't involved with the management of your investment, we are more than happy to help put you in contact with them should you need it."

Custodian Investments
XX Investments, LLC - an SEC-registered transfer agent - acts as the Custodian for all securities sold on the platform that use the Custodian structure. This legal entity holds the securities on behalf of you as an investors. This means investors do not possess the shares, convertible notes, or SAFEs. Instead, the Custodian holds them on their behalf. All securities' voting rights are delegated to the Lead Investor, who directs the Custodian on how to vote for the investor securities. The Custodian is the only entity listed on the cap table because it is the securities' record holder.

Startups use a Custodian to lower the complexity of the capitalization table. This ensures their follow-on financing won't be at risk. Venture capitalists are uncomfortable when startups have many small investors directly on the cap table  (they don't like collecting thousands of signatures).

SPV Investments
Special-Purpose Vehicles are being used for most new Community Rounds. This means Wefunder sets up an LLC for the sole purpose of investing in each startup. All investors pool their capital into the SPV, which invests in the company as one entity with the benefits shared of the Custodian above. Wefunder Admin, LLC is setup as the SPV lead and delegates voting decisions to the Lead Investor. This was previously previously Wefunder Advisors, LLC. SPVs can only hold 250 investors or less for any Reg D offerings.

Diversified Fund 

They allow direct as well as fund-based investments and allow investors to directly connect with the company executives through an integrated chat system. None of the actual investments are facilitated through the platform and happen off site. If you are interested in their fund offerings to diversify Learn More here >

Support

Wefunder offers a contact section with email address for support that we have seen responses come back on. We understand that once a campaign has been launched Wefunder will open a line of communication. We look forward to learning your experiences in the comments. They are based in San Francisco.

History

Founded in 2011 by Greg Belote, Mike Norman, and Nick Tommarello. They started by offering Reg D filings. The team went through YCombinator and leverage the network to help fund many graduates of the program.

Regulation A+ campaigns are for more mature companies looking to raise up to $50 million. This incurs public filing requirements.

Regulatory and Legal Entities

Wefunder Inc is considered the parent company by 2022 SEC filings, but how it differs from the below entities we are not sure. I am guessing this structure helps refine liabilities associated with the risky investment filings. They are structured as a public benefit corporation (B-Corp). In their terms of service they state, "WEFUNDER IS NOT A "BROKER," "DEALER" OR "FUNDING PORTAL" (AS DEFINED IN SECTION 3(A) OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED)." 

Wefunder Advisors LLC their documents also states is a parent company and an exempt reporting adviser for Reg D and SPV offerings. 

Wefunder Portal LLC is an SEC Registered, FINRA Regulated portal (CRD #283503) operating sections of wefunder.com where certain Regulation Crowdfunding offerings are available. 

XX Investments LLC is an SEC-registered transfer agent that also acts as a Custodian on behalf of investors for all securities sold on Wefunder, so the company raising money has only one entity on the cap table. 

Legal Action and Fines

FINRA fined Wefunder $1.4Million for failing to comply with securities laws and rules designed to protect crowdfunding investors. Across 39 separate offerings, Wefunder raised approximately $20 million more than permitted under crowdfunding raise limits. They also improperly sent emails to hundreds of thousands of investors soliciting investments. Startengine was also fined in this same action.

Minimums

They allow investments starting from $100.

External Reviews

The Team at CrowdWise built a video to review WeFunder and Yieldtalk has them listed at 4.5/5 stars

My Take

I, Brian Thopsey, have personally invested in companies through Wefunder and have had a good experience so far. Let us know how it went for you in the comments below.