All You Need to Know About Wefunder
Since inception, the funding portal Wefunder helped nearly 200k investors fund 234 startups, with the dollar value for these investments coming in at over $75.5 million.
It’s an impressive feat considering that this type of equity funding has only been legal in America since May 2016. That was when the government passed a bill that allows everyone—not just the super rich—to invest in startups. Previously, you had to be an accredited investor, with a yearly income of over $200,000 or a net worth of at least $1M.
Wefunder positioned itself well for the future, with many of the companies on the platform having a technology slant. One company on there (at the time of this writing) expects to be the “Tesla of motorcycles” and another promising to be “the best parts of Wikipedia, Reddit, and Google.”
The minimum investment varies from company to company, but typically you can expect it to sit somewhere between $100 and $2,000. When you invest you can get shares of the company and can often get other perks as well. Like free tickets or product.
Before you invest anything make sure you understand that investing in these private companies is VERY different from investing in the stock market. It's much riskier, and you must hold for the long term. And there are often more binary outcomes—companies either do extremely well or extremely poor.
That being said: with any investment, never put in more than you can afford to lose. Especially in startups.
We believe the haystack analogy is the best way to think about startup investing...
More needles = good
Each company is either a needle or hay. You will inevitably see more companies fail than companies who win.
And you want to fill your haystack with as many “needles” as possible. With startup investing, the “who-you-know” factor plays a big role in who wins. Hanging around experienced needle-finders will increase your odds of finding needles.
Beginner angel investors or investors on funding portals often see the deals everyone else has passed on—or they might see deals from founders who have a smaller network. And these are prone to being the riskiest deals out there.
You don’t want to get too caught up in the story or the concept. After all, an idea only goes so far. It’s the execution in the product and marketing that makes the magic happen—very often, great ideas are stolen by companies that are better able to bring a concept to light.
With all of this in mind, when you browse Wefunder you need to look for companies who have an undeniable competitive advantage, a founding team with market penetration experience, and realistic numbers to prove their path to profitability. Also—read through all of the risks listed at the bottom of their Wefunder profile.
Only then should you consider giving them a small slice of your portfolio.