What if we told you there is a way to raise money for your business without a complicated application process, upfront cost, or due diligence on your books? We talked to Ryan Pierce from the growth team at Wefunder about how they made raising capital easy for entrepreneurs. Read on to find out more!
Wefunder is an open investment crowdfunding platform that allows business owners to raise money from accredited and non-accredited investors. Anyone from VCs and angels to your family and friends can invest. With the minimum check being $100, you can raise from $50,000 to even $5 million. Regulation crowdfunding (Reg CF) is when private companies sell equity or debt-based securities to the public and use the money for capital or expand company operations. It is similar to Kickstarter. The only difference is that your supporters don’t get a reward for their contribution but a financial security instrument.
“You can attract people that are looking to reap a financial return as well as individuals that just want to support what you’re doing. “ – Ryan Pierce
Reg CF meshes the best from regular crowdfunding and the VC landscape. You can raise from everyday people, publicly promote the offering, and you can attract top investors to your campaign. Wefunder is the number one investment crowdfunding platform in the US. They have a 40% market share, and most money raised within the industry has gone through the platform that houses around 1.5 million active investors.
“You can start raising capital without an application process, due diligence, and upfront cost.” – Ryan Pierce
As a PBC and B Corp, we use Reg CF in two ways:
- As an alternative funding pathway for funders to raise capital regardless of their background.
- Anyone can invest regardless of their income or credit history.
The Crowdfunding Process at Wefunder
There are two phases on Wefunder: a private and a public one. You can start the private phase quickly by submitting a pitch deck and a high-resolution logo. Then you build a campaign page and start raising capital from your first-degree network with non-binding investment reservations. The investors’ money is protected in the Wefunder escrow bank, and they can get a refund at any time.
If things don’t work out and you change your mind, no paperwork is signed, investors receive a speedy refund, and all that without a PR disaster. Start in private without costs, and if it goes well, you can transition to raising money from the platform’s network.
When you raise $50,000 privately, you become eligible to transition to the public phase, then you file a C-form, a general compliance document. After that, the platform lists you on the explore page and promotes you to their investment community. The benefit of the public phase is that 21 days after you reach $50,000 and file your C-form, you can withdraw the money you initially brought to the table and continually raise.
Wefunder helps you market to the investor community at a tiered rate. Once you hit $50,000, the platform features your company in a new company newsletter sent out to the community, inviting them to check you out. When you reach $100,000, they will launch FB and IG ads to a targeted audience for free to expand more awareness of your campaign. At $250,000, you receive a targeted email blast to Wefunder’s most high net worth investors that expressed interest in investing in your sector. At 1 million dollars, you have a monthly email featuring million-dollar campaigns. At 2 million, you are invited as a guest at the Wefunder podcast, and at 3 million, you are in the Thursday newsletter as a $3M raise.
“The marketing pushes lead to one-third of investment volume. Coupled with the strategy our team helps you build and a clear execution, you can raise a lot of money for your campaign.” – Ryan Pierce
Launching a Campaign
First, create a profile, upload a pitch deck, and a high-resolution logo. Give reasons why people should invest in your campaign. Record a video of yourself describing what you’re doing, why it’s important, and how you will use the capital. The pitch deck can be long or short, but you have an option to write in between the slides, adding context and some narrative. After you’ve built your campaign page, you start sharing it with your first-degree network, family, friends, and customers. Once you hit $50,000, you file your C-form, receive marketing pushes, and cash out. You decide to give equity or debt-based offerings by creating your loan or revenue share contract. You choose your terms, valuation, and interest rates. The control is in your hands.
Wefunder charges a flat 6.5% fee to companies associated with IdeaPros. You’ll need to pay from $2-5,000 for CPA to review your financials, but that is not an upfront cost. If you raise above $1 million, you would have to pay an audit. What you bring in during the private phase is yours. Wefunder doesn’t take any fees until a 6.5% flat rate at the end.
Benefits of Raising Money through Wefunder
The benefits of raising money through Wefunder are numerous:
- No associate fees to get started.
- Angels and VCs can lead the round for you, and you collect more money.
- It’s flexible in structure offerings.
- You can build an army of supporters and brand ambassadors through the campaign.
“When you rope in people through a financial incentive, they are more motivated to share the company with their friends and family, because when you make money, they make money.” – Ryan Pierce
- Wefunder provides counsel surrounding a valuation and the offering structure.
If you want to be successful in raising money, you need to hone in on a message that highlights your purpose, why you’re raising money, how you’re going to use the funds, and how you plan to grow the business. Then, convey it as a great opportunity for the investors.
Once you start raising money, whatever the amount, you should build a community among your investors. The key is to keep them updated on your progress, new developments, and what’s going on with you after they give you the money. If you let them know how much more you need and ask them to share your campaign page, you’ll get to your goal.
Related Reading: Why Crowdfunding Often Ends in Zeros
The “Idea Pros” at IdeaPros have the resources, experience, and tools to help you at this step or any step in the entrepreneurial journey. We partner with entrepreneurs at any stage and who are ready to invest their ideas. Apply for an interview and let’s explore partnering together.