Wefunder Review 2024: Platform Rating, Investor Fees, & More
Wefunder is a platform that allows the general public to invest as little as $100 in early-stage startups and small businesses they believe in.
This review is targeted toward investors considering whether to use Wefunder. If you’re a founder considering raising money on Wefunder, read my Wefunder Founder Review.
My Take
Platform rating: 4/5
The bottom line: Wefunder makes it easy for anyone to invest in startup and small business offerings ranging from flying cars to local coffee shops. Investors on the platform want to earn a return, but most also want to have an impact on their communities and future.
Pros & Cons
Pros
- No minimum to sign up on the platform.
- Wide range of offerings.
- Investment opportunities for as little as $100 to participate.
- Excellent investor education materials.
- Excellent supporting information on investments, including Lead Investors and Investor Panels.
Cons
- High risk.
- No track record of startups on the platform making investors money.
- No way to see how much your investments are worth.
- High valuations limit your return upside.
- Startups are raising large amounts of money on the platform with limited traction.
- Wefunder profiles often obscure financial information and can only be found in SEC filings and other dense legal documents.
- Information on Wefunder profiles is often projections and assumptions and needs to be fact-checked for accuracy.
Wefunder is best for:
- Investors wanting to support local businesses and startups
- Investors wanting to access Y Combinator startups
- Investors seeking impact more than just financial returns
- Risk-tolerant investors
- Investors willing to wait 10+ years for a possible return
Full Review
Billed as the largest equity crowdfunding platform based on investment volume from Regulation Crowdfunding (Reg CF) offerings since 2016, Wefunder allows anyone to angel invest in startups. To date, Wefunder has helped 2,833 founders raise $617 million in capital from the crowd, and those startups have gone on to raise $5 billion in follow-on financing.
Wefunder is a Public Benefit Corporation with a compelling charter to fix capitalism by donating 5% of its profits to support the mentorship of founders, create more opportunities for the less privileged, rally local communities around small businesses, work with governments to modernize laws, and more. In addition, Wefunder is a certified B Corp.
Wefunder recently launched Community Round to allow users, fans, and customers to invest alongside venture capitalists and angel investors. Startups like Mercury, Replit, and Substack have launched community rounds. In addition, Wefunder just launched Capitalize to help accredited investors invest in YC startups and other venture-backed companies. Finally, Wefunder just expanded its operations to Europe, and the company plans to build a stock market for private startups to increase liquidity for investors.
Wefunder by the Numbers
Raised for startups: $617 million
Number of founders funded: 2,833
Jobs created: 38,636
Follow-on financing after Wefunder: $5 billion
Users: 1,922,710
Wefunder Basics
Platform minimum: There is no minimum to sign up for or to maintain on the platform.
Minimum investment: $100. However, each startup picks its investment minimum.
The number of companies to invest in: 100+ (as of May 2023)
Wefunder Investor Fees & FAQ
Fees:
- For payments made by bank ACH, wires, or checks, Wefunder charges investors a transaction fee of 2%, with a minimum of $8 and a max of $100.
- For credit cards, Apple Pay, or Google Pay, Wefunder charges a 5% fee, with a minimum of $8 and no maximum.
Who can invest: Anyone can invest on Wefunder, except investors from certain sanctioned countries, including Cuba, Iran, North Korea, Russia, Syria, and Ukraine’s Donetsk, Crimea, and Luhansk regions.
How to invest:
- Sign up for a Wefunder account.
- Click on a company’s campaign page.
- Click the red “Invest” button on the right-hand side.
Payment methods:
- Bank transfer (US only)
- Check (investments greater than $1,000)
- Credit card ($10,000 limit)
- Apple Pay ($10,000 limit)
- Google Pay ($10,000 limit)
- Wire transfer (international investors only)
Refunds: An investor can cancel their investment commitment anytime until a round closes (or two days after you invest, if later). You’ll receive a full refund, including any fees.
Wefunder Features to Know About
Lead investor: Companies designate a lead investor for their Wefunder round. This person may be a professional investor, an industry expert, or someone familiar with the startup. The lead investor is responsible for signing documents such as for follow-on financing authorization on behalf of the Wefunder investors and must invest on the same investment terms as everyone else. Similar to the dynamics in venture capital or angel investing, who the lead investor is, how much they are investing, and why they are investing may be helpful information to review before deciding whether to commit money to a funding round on Wefunder.
Investor panel: Wefunder may help set up an investor panel for select startups raising on its platform. The panel is structured as a video recording and includes written notes on the strengths and advice for the company. Professional investors, founders, industry experts, and others may participate on the investor panel to ask the startup questions.
Early Bird: Startups on Wefunder may elect to offer Early Bird terms to offer slightly better terms to investors to incentivize investors to back them before everyone else. For example, a startup raising on a $10 million valuation cap may offer investors Early Bird terms to invest at an $8 million valuation cap for the first $100,000 investors.
Perks: While equity or debt is the primary incentive for someone to invest in startups on Wefunder, companies may offer perks to investors as a secondary incentive. Similar to Kickstarter, the investment amount dictates the structure of the perks. For example, a startup may offer company swag, VIP access to new products and discounts, and more.
Referral Program: Wefunder’s referral program, Rewards, allows you to earn $2,500 and help a founder save $2,500 on fees when they file a Reg CF raise.
Various offering types: Wefunder conducts Regulation CF (Reg CF), Regulation A+ (Reg A+), and Regulation D (Reg D) offerings and raises capital to invest directly in startups from venture capital funds on its platform—the type of offering dictates who may participate and the investment limits for each investor. For example, Regulation D offerings are only available to accredited investors.
Various investment contracts: Wefunder has a mix of equity and debt offerings. Companies on Wefunder may offer preferred stock, common stock, SAFEs, convertible notes, simple loans, revenue shares, and promissory notes. It’s important to read the investment structure on each company’s offering page before deciding whether to invest, and you can learn more about the terms of each investment contract here.
Is Wefunder right for you?
Wefunder is an excellent, beginner-friendly option for investors wanting to start investing in startups and small businesses. With a low-friction sign-up and investment process, excellent investor education materials, and various company offerings, it’s easy to get your feet wet by making small investments in several companies that you believe should exist in the world. It has everything from startups backed by Y Combinator, the best accelerator, with ambitions to change the world to mom-and-pop shops with enduring impacts on their local communities.
Wefunder may not be the best option for experienced startup investors optimizing for returns. Said investors with good deal flow can participate directly by angel investing in founders they know or by participating in traditionally lucrative asset classes such as limited partners in venture capital or private equity firms.
What to watch for in the future
- Wefunder will continue to increase and diversify its platform offerings to appeal to various investors. For example, Wefunder recently opened 30+ Y Combinator deals for accredited investors.
- Wefunder will roll out the ability to track investment markups over time.
- Wefunder will build a stock market for private startups once there is enough secondary interest in deals on the platform.
- Wefunder will lower the friction for investors to help and support founders they fund on the platform, potentially facilitating additional shares in startups or carried interest on fund investments.
