Wefunder Logo

Got a question? We'd love to help!

Can't find what you're looking for?

Email us: support@wefunder.com

Investors FAQ

Getting Started

  • What is Wefunder?

    We help everyone invest as little as $100 in the startups they love.  

    You can think of us as “Kickstarter for investing.” 

    Unlike Kickstarter, you are not buying a product or donating to an artist. Instead, you are investing in a business hoping to earn a return on your investment. 

    You decide which companies are worthy of funding. If the business does well, you may make money.  If it doesn’t do well, you lose all your money. 

    Either way, you join a community of other investors who seek to help the startup succeed. You sometimes get neat perks from the companies too. 

  • How is Wefunder different from the stock market?

    Startups on Wefunder are much earlier-stage than companies listed on the NASDAQ or the New York Stock Exchange. Here are a few significant differences:

  • Wait… how is this legal?

    Starting in May of 2016, thanks to a new law called Regulation Crowdfunding, it became legal for everyone to invest small amounts of money in the startups they believed in. 

    From 1933 to 2016, investing in a private company was illegal unless you were an “accredited investor” (i.e., wealthy).

    We started Wefunder to fix that because we weren’t rich and wanted to invest in our friends. The first thing we had to do was convince Congress to change the law. We managed to do that, and here we are today! 

  • Why should I invest in startups?

    It shouldn't be to make lots of money! This isn't the stock market. Startups are much riskier and more likely to fail.  Greed is a wrong reason to invest.

    Of course, if you invest wisely, you can make money.  Our advice?  Invest only in what you understand (and preferably love). If you are a customer and love the product, it’s more likely a good investment. If you don’t understand it, investing may be a bad idea. 

    Our opinion is that investing should not be solely about earning a return. To invest in something as risky as a startup, you should feel something extra beyond just the business model.  For us, that “something extra” is the fulfillment we feel helping a founder take "their shot" at making our world slightly better. We also think it’s pretty cool to learn about different industries when we get updates from the founder.

  • Any tips for a first-time investor on Wefunder?

    Our advice?  Start slow.

    1. Expect to lose it all. Only invest what you can afford to lose.

    2. Only invest in what you understand. Preferably a product or mission that you love.

    3. Do your research. You also can ask the founders a question on their company profile.

    4. Diversify. It’s better to make multiple small investments rather than one large one. Plus, it’ll help you learn more.

    5. Look at the Lead Investor.  Has a more experienced investor invested in the company under the same terms as you?  Why are they investing?

    For more tips, head to Startup Investor School – an entire video series of guidance from the world's best startup investor, Y Combinator.

    Note that these are tips, not investment *recommendations,* and you should make your own decisions when deciding what to invest in.

  • What kind of companies are on Wefunder?

    As we like to say, nearly the entire American economy! That’s the fun part! We’ve funded tens of millions of dollars in startups like:

    • Moonshots like flying cars, space telescopes, and fusion reactors
    • Neighborhood businesses like cafés, restaurants, and breweries
    • Software like mobile apps and online education
    • Biotechnology, like glowing plants and researching cancer cures
    • Entertainment like Hollywood studios and immersive theater
    • And much more!

    The one commonality? All companies that raise successfully on Wefunder have a loyal community of people who believe in them. 

  • After I invest, how often should I expect updates?

    Wefunder recommends that founders update their investors at least once per quarter, but at the very least, two updates yearly. If you see a company that still needs to provide this update, contact our team at support@wefunder.com, and we will be happy to ask the founders for an update.

    Most companies are also legally required to issue an Annual Report 120 days after the end of their fiscal year. The annual report is a comprehensive update with their latest financials, board members, new financings, and more. Sometimes, they may no longer be required to file this information, though we encourage them to do so anyway. Most companies have their fiscal year end on December 31st, and their annual reports come out by April 30th. 

  • Is Wefunder regulated?

    Yes!  The SEC and FINRA wrote around 1,000 pages of regulations we work diligently to comply with.

  • Where does my money go after I invest?

    Wefunder is prohibited by law from touching your money.

    When you invest, your funds are transferred to an escrow account in the custody of Silicon Valley Bridge Bank.  If the raise succeeds, your money will be released to the startup. Otherwise, it will be refunded to you. 

  • Do you recommend good investments?

    No!  It’s illegal for us to endorse or recommend any company. 

    But even if it wasn’t illegal, we don’t want Wefunder to be a “gatekeeper” that picks and chooses which ideas are worthy of funding. That’s for you to decide.

    No company on Wefunder – no matter where it appears on our website – is endorsed by us.  Also, while we may sometimes help companies “make their profiles look pretty,” all of this information is provided and fact-checked as accurate by the companies, not us.     

    While we don’t vet ideas, we do our best to screen for fraud, such as researching the founders and verifying that the documents they’ve provided comply with the law. 

  • Why did you create Wefunder?

    Initially, we created it for ourselves. We wanted to invest in our friends.  We also wanted to support causes we cared about with our dollars, like revitalizing American manufacturing or researching cancer. We see every startup as a social movement to change the world in one specific way. We wanted to join more of those movements and help where possible. 

    That’s also why we became a Public Benefit Corporation.  We aim to make capitalism work better by sprinkling the Silicon Valley fairy dust across the rest of America. We want to help thousands more potential founders get off the ground and take their shot. 

    Join us!

Risks

  • Just how risky are startups?

    Very! You should only invest what you can afford to lose. Only invest so much that it won't impact your lifestyle or retirement plans. Every investment on Wefunder is much riskier than a public company on the stock market. You may lose every dollar you invest on Wefunder.

  • How can I decrease the risk?

    You are more likely to avoid loss by diversifying your investments, focusing on areas in which you have the expertise, and investing in startups whose products you passionately use. Even professional investors have difficulty predicting how startups will earn money in the future (e.g., Google in 1999). Investing in what you know and find personally valuable is an important signal of a good investment.

  • How many investments should I make?

    We recommend making several small investments each year rather than one large one. For instance, if you decide you can safely invest $5,000 per year in startups, it'll be less risky to make ten $500 investments instead of a single $5,000 one. You should only invest what you can afford to lose.

  • Is an equity investment appropriate for me?

    The answer is yes if you can afford to lose every dollar you invest on Wefunder and wait 7+ years for a return.

    You might strongly believe in a company's future success, but it's safer to think of an equity investment as a lottery ticket that might pay off in the long term.

    Unlike the stock market, investment outcomes are much more binary (complete failure or wild success). No stock market allows you to easily re-sell your investment stake to someone else unless the company is acquired or prepares for an IPO.

  • Is a debt investment appropriate for me?

    Compared to equity investments, loans can be slightly less risky but have a smaller upside. Assuming that even a loan would not be paid back would be best. Only invest what you can afford to lose. 

  • Can I easily resell my investment?

    It's safest to assume you cannot resell your investment to another investor. First, there has yet to be a liquid secondary market like the New York Stock Exchange for private companies. Regulation Crowdfunding also specifically prohibits the resale of securities except to the issuer, an accredited investor, a family member, or their trust.

  • Will my percentage ownership be diluted?

    Yes. An equity stake will almost certainly be diluted.

    Successful startups host many rounds of financings, all the way to an IPO. For each financing, the startup issues additional stock to the new investors. This is healthy and normal as long as the company's value increases with each funding round. For example, the first investor in Facebook, Peter Thiel, originally purchased ~10% of the company for $500,000. By 2011, that stake was diluted to under 3% but estimated to be worth ~$2 billion.

    Sometimes, when things are not going well, the startup can go bankrupt or raise more money in a "down round," which means the company's value has decreased since the last financing. This is very bad for the founders and past investors; the dilution happens rapidly. But it's preferable to the startup going bankrupt and the investors losing everything.

  • Will the startup use Wefunder in the future?

    Wefunder provides startups with free continued access to our platform, but they are not guaranteed to continue using our services.

Lead Investors

  • What is a Lead Investor?

    The Lead Investor is an investor who is familiar with the startup and decided to invest on the same terms as those offered on Wefunder.  More importantly, the Lead Investor directs the voting power of all Wefunder investors and can take other actions on behalf of investors.

    When deciding whether to invest in a company, you should look at who the Lead Investor is, see how much they invested and why, and make your own decision on if you trust their judgement. 

    Note that Wefunder does not endorse the views or activities of any Lead Investor and our approval of a Lead Investor does not constitute an investment recommendation.

  • What does a Lead Investor do?

    The Lead Investor:

    1. Decides if they want to invest on the same terms as those offered on Wefunder.

    2. Directs the signing of documents on behalf of all investors on Wefunder, such as SAFEs converting to equity, follow-on financing authorizations, acquisitions, or any other corporate action. These are the same documents a Lead signs for their personal investment.

    Note that Wefunder does not endorse the views or activities of any Lead Investor and our approval of a Lead Investor does not constitute an investment recommendation.

  • Do I have voting rights?

    All offerings on Wefunder will have information about the voting rights of the securities sold. When voting rights are offered, these voting rights are directed by the Lead Investor.  

  • Can we fire a Lead Investor?

    Yes. If there is evidence of behavior that is in bad faith or a serious conflict of interest, Wefunder can intervene in extraordinary circumstances. 

    Depending on the circumstances, Wefunder can remove the Lead Investor, organize a vote of all Wefunder investors on whether to remove the Lead Investor, and/or organize a vote of all Wefunder investors on a particular voting decision for which the Lead Investor has a conflict of interest.  

  • Will the Lead Investor be paid?

    No, they won't be compensated for their role as a Lead Investor. But, they may be appointed as portfolio manager to an SPV formed by Wefunder in a future Reg D round, for which they could receive carried interest.

SPVs & More

  • How do SPVs work?

    To ease logistical burden for founders and solve problems with having too many stockholders on the cap table, we are now using special-purpose vehicle (SPVs) for most new fundraises. This means we'll set up an LLC that exists for the sole purpose of investing in each startup. All investors pool their capital into the SPV, which then invests in the company as 1 entity. If there are early bird terms, a separate SPV will be set up to hold the early bird investors. 

    We'll set up these SPVs at no extra charge to companies or investors.

  • Why do startups use SPVs?

    Startups use SPVs to ensure their future growth and follow-on financings won’t be at risk. Having too many individual stockholders can make venture capitalists skeptical, require companies to go public before they're ready, and make gathering stockholder approvals a challenge. 

    With an SPV, founders can have an unlimited number of smaller investors grouped into one large entity, with voting power directed by a Lead Investor.

    For more info on how SPVs solve some tricky legal issues in structuring investments, see here.

  • Who manages the SPV?

    For most new SPVs, the manager is Wefunder Admin, LLC, who then delegates voting decisions to the Lead Investor.

    For legacy Reg D SPVs and those set up for certain purposes such as investing in follow-on financings, the manager is Wefunder Advisors, LLC.

    The manager of the relevant SPV is indicated in the Subscription Agreement that investors sign when they invest through an SPV.

  • Will I be investing via the custodian or SPV?

    It depends on the offering. If the company is using the custodian or SPVs, that will be clearly indicated in the legal disclosures in their Form C. 

    As of March 15th 2021, we have seen many companies use SPVs, although some companies still choose to use the custodian. 

    Most raises that launched between May 2020 and March 15th, 2021 used the custodian. 

  • What is a Custodian?

    A Custodian is an entity (such as a broker-dealer, bank, or transfer agent) that holds any securities on behalf of all investors (who are the "beneficial owners" of the securities).  

    This means investors do not actually possess the shares, convertible notes, or SAFEs. Instead, the Custodian holds them on their behalf. All voting rights of securities are delegated to the Lead Investor, who directs the Custodian on how it should vote the investor securities. This makes the Custodian the only entity listed on the cap table, because it is the record holder of all the securities. 

    On Wefunder, XX Investments LLC - an SEC-registered transfer agent - acts as Custodian for all securities sold on the platform that use the Custodian structure.


  • Why are my securities held by the Custodian?

    Using a Custodian increases the quality of startups that use Wefunder while also giving more voting power to investors on Wefunder. 

    • Access to higher-quality investments.  With a Custodian, higher-quality startups with other fundraising options are more willing to use Wefunder. Startups use a Custodian to ensure 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). With a Custodian, all those smaller investors are represented by one entity on the cap table: XX Investments LLC. 

    • Concentrate investor voting power into one Lead Investor.  Before Custodians, almost no companies that crowdfunded offered voting rights to their investors.  Now, all voting rights are held by the Custodian, which must vote as directed by the Lead Investor.

Earning a Return

  • How do I earn a return?

    The amount you may earn depends on the type of investment contract the company is offering.

    There are four classes on Wefunder:

    • Debt.  Some local businesses offer a simple loan or revenue share.  A simple loan, just like your car loan, has a fixed repayment schedule known in advance.  Unlike a loan, a revenue share returns a fixed amount of money (such as 2X your investment), but the time it takes to repay depends on how well the business does.  The faster the business grows revenue, the faster you earn a return, and the higher your effective interest rate.  

    • Convertibles. Most early-stage technology startups use a Convertible Note or Simple Agreement for Future Equity. These will convert your investment to stock at a later date if the company raises a "priced round" from major investors, most often venture capitalists. At this point, you are a shareholder owning equity, and you earn a return if the value of that stock goes up over time, and you are able to sell it.

    • Stock, No Dividends. When a startup is at a stage where they can afford to pay lawyers tens of thousands of dollars, they will do a "priced round". Like the stock market, you are buying equity at a fixed price per share (or unit for LLCs). If the company is successful, the value of the stock can increase with each subsequent round of financing, until the company is acquired or goes public. Then you earn a return.

    • Stock, Dividends.  While a tech startup almost never offers dividends, a later-stage local business - such as a brewery opening a second location - often will.  The type of dividend can vary.  Some might offer a fixed dividend per share per year. Some might offer a percentage of profits.  A common scenario is also to "swap" the dividend after your investment is repaid.  For instance, a brewery might share 80% of its profits until the investors are repaid, and then 20% thereafter in perpetuity.

  • How long until I see a return?

    The amount of time it takes to see a return is highly dependent on the type of investment contract.

    • Debt. A simple loan will define the number of months until it is paid back. For a revenue share, it depends on their projections for future revenue. The faster the business makes money, the faster you will see a return.

    • Convertibles & Stock with No Dividends. You are waiting until the company goes public or is acquired. This can take a very long time. It took the early investors in Harmonix (the creators of Guitar Hero) over 10 years to earn a return.

    • Stock with Dividends.  This depends on the specific investment agreement. Typically, dividends are a percentage of profits. Therefore, the amount of time to see a return depends on how profitable the business is.

  • How is the valuation determined?

    Market demand determines the valuation. Valuation shifts with time, depending on the amount of capital chasing startups. Right now, early-stage high-growth startups are often valued at $3 to $20 million for their first financing. Lifestyle businesses are valued at less. Companies that have raised several rounds of financing and are further along are worth far more.

    In order to get a sense if a valuation seems reasonable, look at who the Lead Investor is.  How experienced are they?  How much did they invest under the same terms?  

  • Where can I get more advice on how to invest wisely?

    One of the best early-stage investing firms - measured by objective returns - is Y Combinator.  They were the first investors in Reddit, Dropbox, Airbnb, Stripe, and over 100 more startups now worth over $100 million.  

    Head over to Startup Investor School – an entire video series of investor tips created by YC. 

  • Does my investment qualify for QSBS tax exemption?

    In theory, you should be able to claim the Qualified Small Business Stock (QSBS) tax exemption on the investments made on Wefunder the same way you could for any early-stage business that meets the requirements of Section 1202 of the tax code.

    The QSBS tax exemption has a variety of requirements, including:

        - The company is a US C-Corp with less than $50M in gross assets at the time the stock is issued (including the money raised in the financing)

        - At least 80% of the company's assets must be used in operating a "qualified trade or business," which excludes: personal services; banking, insurance, financing, leasing, or investing; farming; mining; or operating a hotel, motel, or restaurant

        - The investor is not a corporation, acquires the stock at its original issuance (ie., not a secondary purchase), and holds the stock for at least 5 years

    Read more on QSBS requirements here. 

    We can’t guarantee that any investments made on Wefunder will qualify for QSBS. If you have questions on eligibility, we recommend speaking with your tax advisor. You can also ask founders whether they have looked into QSBS eligibility by leaving a comment on the company’s Ask a Question page.

Investment Contracts

  • What is a SAFE?

    A SAFE grants an investor the right to obtain equity at a future date if the startup sells shares in future financing. Top startups have historically used it in Silicon Valley to raise money from accredited angel investors. You should only invest in a SAFE if you believe the startup can raise financing in the future from professional investors.

    Early-stage startups use SAFEs to delay the difficult task of figuring out how much a startup is worth. It's also a much cheaper and simpler contract than priced equity Community Rounds, which may require months of negotiation and upwards of 30 pages of legalese, costing tens of thousands of dollars.

    The number of shares you receive is determined at the subsequent priced financing when professional investors – typically venture capitalists – set the price for preferred stock. Then, calculated using the Valuation Cap and sometimes the Discount Rate, your SAFE often converts into shares at a lower price than the venture capitalists paid since you invested earlier.

    The Valuation Cap is the most important term in this security. It puts a maximum price on the stock price - the lower the price, the more shares you will get. If you invest in a startup with a valuation cap of $8 million, and they later raise at a $20 million Pre-Money Valuation, the amount of stock you'll get will be priced off the $8 million number. But, if the subsequent investors value the company at $4 million, that will be your price instead (perhaps further discounted by the Discount Rate).

    Unlike a Convertible Note, a SAFE is not a loan. As such, it does not accrue interest, have a maturity date, or have a legal obligation to be paid back. This makes it a simpler and cheaper way to finance a startup, and it typically better aligns with the intention of most early-stage equity investors who never intended to be lenders (convertible notes are rarely, if ever, paid back in cash despite being a debt instrument – the startup goes bankrupt).

    Further Reading:

  • What is a Convertible Note?

    A convertible note is an unsecured loan that converts to stock at some point in the future. They are one the most popular forms of seed-stage startup investing because of their history, although the SAFE is rapidly becoming more prevalent.

    Convertible notes are also helpful because they delay the difficult task of figuring out how much the startup is worth. The number of shares you receive is determined at the subsequent qualified financing (typically $1 million) when venture capitalists set the price for preferred stock. Then, calculated using the Valuation Cap, Discount Rate, and Interest Rate, your loan converts into shares at a lower price than the venture capitalists paid since you invested earlier.

    If the startup does not raise another round of funding, the note becomes due at the maturity date, typically in 18-24 months. Convertible notes, however, are rarely repaid in cash. Instead, the note usually converts to equity at a pre-set target price.

    The discount and interest rates have a relatively minor impact on future returns. The most important term to focus on – which can significantly impact the price of your future shares – is the Valuation Cap. This is usually set between $3 to $20 million, depending on how "hot" the startup is.

    Learn more about convertible notes     here.

  • How does Preferred Stock work?

    As a non-lead investor investing a small amount, the essential terms to pay attention to are the Post-Money Valuation or the Pre-Money Valuation. This is effectively what the company is considered to be worth; with it, you can calculate your percentage ownership. Comparatively, the price of the stock is relatively meaningless.

    Most priced round contracts for venture-backed companies are based on the National Venture Capital Association templates. 

    Read more about the NVCA documents.
    Learn more about terms.

  • How do revenue share or loans work?

    High-growth startups rarely raise seed-stage funding with loans, as debt doesn't offer enough return to account for the risk investors are taking.

    However, loans or promissory notes can be more appropriate for cash-generating small businesses. One benefit of investing with a loan is that the investor receives cash every quarter or year, as the principal is repaid alongside the interest rate. The downside of debt is you have no equity stake if the company suddenly becomes much more valuable.

    A Wefunder Revenue Share Loan Agreement is a promissory note paid back from a share of the business's revenues.  

    Important terms in this note include:

    • Gross or Net Revenues. Net revenues exclude returns or shipping costs.
    • Revenue Percentage. This is the percentage of revenue that is shared.
    • Repayment Amount. Typically 1.5-3.0X, this is the maximum amount you will be paid back.
    • Quarterly or Annual Disbursement. Companies choose to make annual or quarterly payments.
    • Defer Payments. By default, every company can miss one payment without being in default.
    • Secured. Some loans may be secured with all property of the business.

    Some businesses choose not to share their revenue and instead offer something more like a car loan, using the Wefunder Promissory Note.  Important terms in this note include:

    • Interest Rate. The interest rate per annum.
    • Maturity Date. How many years until the loan is fully paid back?
    • Quarterly or Annual Disbursement. Companies choose to make annual or quarterly payments.
    • Grace Period. By default, these loans are deferred until 30 days after their crowdfunding deadline date. Some businesses may defer the start of their loan at a later date, such as when their business is scheduled to open.
    • Defer Payments. By default, every company can miss one payment without being in default. This is meant to allow businesses time to recover if they have a bad year.
    • Secured. Some loans may be secured with all property of the business.
    • Personal Guarantee. Some loans may have an individual that personally guarantees payment.
    • Subordination. Some loans are subordinate to a major bank lender.

  • Does Wefunder suggest the terms of Community Rounds?

    It is up to each company to set the terms of their Community Round. 

    Wefunder sometimes provides advice or guidance to companies on what the right terms might be. We base this advice on a number of factors, including the company's stage of development, metrics such as revenue and user growth, industry, market size, comparable companies, and the overall state of the market. Wefunder may also refuse to host a particular Community Round if we believe the terms offered are unreasonable.

Payment

  • What are my payment options?

    You can pay using a bank transfer (US only), check (for investments $1000+), credit card, Apple Pay, Google Pay, or wire transfer (international investors only). If you choose to pay by credit card, Apple Pay, or Google Pay, there is a $10,000 limit.

    International investors can pay by wire transfer – we recommend TransferWise. You'll likely have to fund your Wefunder Cash (wefunder.com/cash) account with a wire, and then make your commitment to a specific company.

  • Do my funds enter an escrow account?

    Yes. Your investment is placed in a third-party escrow account hosted by Silicon Valley Bridge Bank or Vitesse PSP. Funds are transferred to the business only after the Community Round goal has been met.

  • How long do I have to send a payment?

    You can send your payment in at any time during the Community Round, but you will want to make sure we have the payment by the time the Community Round closes, or your investment application will be automatically canceled. 

  • How do I check my payment status?

    You can go ahead and head over to your portfolio page to see the status of your payment. The portfolio page will show you where you are in the process of successfully submitting your application to invest. If the investment says pending, this is not necessarily referring to a payment. This may mean that we are waiting on the investment to finalize before it can be confirmed if you are accepted into the Community Round. If you need to edit your investment, you can do this here if the Community Round is still open, not oversubscribed, and your funds have yet to be sent to the company.

  • My payment failed. Help!

    When a payment fails, we send you an email. You'll need to follow the instructions in the email to fix the failed payment. 

    If you didn't get the email, you can find which of your investments is awaiting payment on your portfolio page.

  • I'm an international investor and I need the IBAN number.

    We do not have an IBAN. You should be able to send a BIC/SWIFT wire through your bank. We recommend using TransferWise.

    If this proves difficult, you may need to contact investor support at support@wefunder.com.

    Complete international investor guide here.

  • What fees do investors pay?

    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.

    Investors can get their first investment fee-free by completing the welcome sequence when creating their account (www.wefunder.com/welcome) and using their ACH bank account (US banks only) or a wire. Just so you know, this only applies to first investments.

    Fees are one-time and are not reoccurring.

  • Why is my investment still pending?

    Your investment may still be pending because we are still processing your payment, you have action items to complete, or we are waiting for the Community Round to finalize.

    If your payment is still processing, here are our typical processing times.

    • Bank Transfers (ACH): It takes approximately 3-5 business days to confirm that funds are deposited.
    • Checks: Once the check is deposited into our third-party escrow account, they will send us the payment information, and we will credit your account. Checks typically take 5-7 business days for us to receive and reconcile them.
    • Wire Transfers: Once the wire is deposited into our third-party escrow account, they will send us the payment information, and we will credit your account. Wires typically take 3-5 business days (5-7 business days for international) for us to receive and reconcile them because there are several intermediary banks that they typically have to go through, and then occasionally a delay when it hits our escrow account and notifies our system.
    • Credit cards settle instantly if you are in a pinch for time. We highly recommend this if a raise is close to closing.

    Include your unique investment ID on your wire or check to avoid potential delays.

    If you're paying by wire or check, please provide additional information about the payment to help us reconcile it. To do so, after you've sent out the wire / check, log into Wefunder, go to your portfolio page, and enter the information that asks you to "provide payment info." 

    If your investment application has action items, you'll need to complete those to submit the application successfully. You will need to provide your SSN (required for all investments), verify your identity (once your collective investments are more than $2,500), or verify accreditation status if you indicate you are an accredited investor or are making an investment over $25,000.

    If all of those are complete and your investment looks like it was submitted successfully, we are waiting for the Community Round to finalize. You will typically see a date for when this will happen on the timeline located on your portfolio page. Just so you know, this date is just an estimate, and times may vary.

  • Why do you need my SSN?

    When investing on Wefunder, you need to provide a tax ID to invest. Tax ID generally means an SSN for an individual and an EIN for a company. We require these because when the company you invest in makes a distribution to investors (for example, if they get acquired), we’ll need to provide tax documents to you, such as a Form K-1, which requires us to include your SSN. If we don't receive your SSN, your investment will be canceled.

    We know you might be hesitant to provide this information, but we guard your SSN like our life depends on it. 

    We encrypt and store Social Security Numbers (SSNs) on a separate group of servers from wefunder.com. We use an RSA key to encrypt the SSN and isolate the private key from production machines. Access to the database storing encrypted SSNs is restricted within Wefunder on a need-to-know basis. We have a policy for access if and when an employee may need to view an individual's SSNs (for example, if we're preparing a tax filing or investigating fraud).

  • I've been waitlisted. What does that mean?

    Some investors are waitlisted when many apply to invest, and the company receives more money than they can legally accept. 

    It is common for a Community Round to have a rush of investors as it gets closer to reaching its desired amount, which can create misunderstandings on exactly "when" it becomes oversubscribed. 

    We can only fully confirm investments after the Community Round ends, and our Wefunder Closing Team works with the company to get everything in order. Our automatic emails regarding the company will all mention the waitlist, including if you invested before it was oversubscribed, which took a bit to process. You could be successful in Reg CF but still, receive a waitlist email.

    In an oversubscription situation, investments are accepted on a first-come, first-served basis unless the issuer requests a different setup.

  • Why is my investment still in escrow?

    To execute your investment, there are a bunch of SEC guidelines and regulations we have to abide by.  Sometimes, it can take several months to finalize a Community Round after it closes. Once your funds have been sent to the company, and your contract is countersigned, your investment will be marked as confirmed.

  • Why is my total investment less than I committed?

    We do not issue fractional shares, so we round down your commitment.

    For instance, if a company's share price is $20, and you commit $250, we'll lower your commitment to $240 to purchase 12 shares.

    However, you will still be eligible for any perks you were expecting at that requested $250 level. Each company will manage the disbursement of perks after all contracts have been finalized. 

  • What is Wefunder Cash?

    Your Wefunder Cash account is your online wallet with Wefunder. Literally, our third-party banking partner, Silicon Valley Bridge Bank, holds the money.

    Transferring funds to your Cash account right after making a reservation helps you to invest faster – you can apply funds from there once you confirm an investment.

    Any funds you transfer into your Cash account can be withdrawn anytime or used to fund a company. 

    More on Wefunder Cash & reservations here.

  • What exactly is a reservation?

    When making a reservation, you are interested in a Community Round currently in what we call the "Testing The Waters (TTW)." This means they are taking reservations to gauge if they would have a successful Community Round. 

    When making a reservation, you will be asked how you intend to pay:

    • If paying by ACH, Wefunder will transfer the funds from your bank to your Wefunder Cash account (https://www.wefunder.com/cash). 
    • If paying by Wire, Wefunder will put a request to transfer funds to your Wefunder Cash account (https://www.wefunder.com/cash). The investor must use the directions in their account (also sent via email) to initiate the transfer from their bank.
    • If paying by Credit Card, Wefunder will pre-authorize their credit card to ensure it is active and can be charged. The pre-authorization will drop off the credit card holder's account within 48 hours.

    Why do you use Wefunder Cash?

    We utilize your Wefunder Cash account to calculate the reservation commitments towards a company's metrics. We can only legally take payments towards a company's escrow account once they file their Form C. The Community Round will do this with the help of Wefunder once they receive their minimum in reservations.

    Early Bird Terms and Contracts

    During the TTW period, terms, like money, cannot be legally tied to a reservation. This means that if the company offers Early Bird Terms, the investors who confirm their reservation into an investment first will get Early Bird Terms - not those who made a reservation first. Similarly, contracts are unavailable during this time as there are no contractual agreements for reservations in the TTW stage.

    What happens when the company files its Form C?

    When a company hits its goal, Wefunder will help that company file its Form C. Once that is complete, everyone who made a reservation will be emailed to confirm their reservation into an investment. When you do this, you can proceed with the payment method you originally intended or change to a new one. Investors will have the following options to pay:

    • ACH Transfer (US bank account only)
    • Credit Card - including Apple Pay and Google Pay (Limit $10,000 per investment.)
    • Wire Transfer (investments $1000+ only.)
    • Check (US only and investments $1000+)


    What if the company cancels its Community Round before filing its Form C? What if I don't want to confirm the reservation into an investment?

    If you or the Community Round cancel the reservation, you will be refunded any funds sent, including paid Wefunder fees.

Refunds

  • Can I cancel my investment and get a refund?

    Yes. You can change your mind anytime until a Community Round closes (or two days after you invest, if later), and you will receive a full refund, including any fees. Unfortunately, investments cannot be canceled after that time.

    You'll receive a five-day notice via e-mail when a Community Round is about to close. Additionally, we put a seven-day warning on the Community Round page to inform investors that it will close soon. You can cancel at any point up until the Community Round closes.

    Once the minimum funding target is met, many companies do a "rolling close," where investments that have successfully applied to invest are executed, and funds are transferred. However, the Community Round is still open to receive new investments. You'll still receive a five-day notice if this occurs. Once your funds are transferred to the company, you can no longer cancel your investment or obtain a refund. 

  • How will I receive a refund?

    When you cancel your investment, or a Community Round fails, a refund, including fees, will automatically be sent back to the bank account or credit card used to invest. 

    If you send a check or a wire, your money will be refunded to your Wefunder Cash account. From there, you can refund the money to your bank account (US banks only) or wire the funds to your bank (international investors only.) Unfortunately, we cannot refund any check payment via check, as stated when you chose this option to pay. These refunds must be completed by bank transfer or wire transfer. 

    We can also refund investments in Wefunder credit, which can be used toward future investments and fees!

  • How long will it take to receive my refund?

    We initiate refunds as we receive them, but it can take a few weeks to reach you, especially if you invested with a check or wire or from abroad. Our typical refund timeframes are as follows:

    • ACH Bank (US) - Within 3-5 Business Days
    • Credit Card - Within 3 Business Days
    • Wire (US) - Within 5-7 Business Days
    • Wire (International) - Within 7-10 Business Days
    • Wefunder Credits - Same Day

  • What are the limits on canceling an investment?

    Once the Community Round has a close date, you'll receive a 5-day notice. In addition, you will see a 7-day countdown on the Community Round page. You have up until the Community Round closes to cancel.

    Once the minimum funding target is met, some companies do a "rolling close," where investments that have successfully applied are executed, and funds are transferred. However, the Community Round is still open to receive new investments. 

    You'll still receive a five-day notice when any close is about to happen.

  • Can the company not accept my investment?

    Yes.  Companies may choose not to accept your investment for any reason. One reason may be that they discovered you worked for a major competitor.

    After the Community Round closes and the company has countersigned the contract and received the funds, your investment can no longer be canceled.

  • When will the Community Round close?

    The Community Round will close for sure at the company's offering deadline. 

    However, a successful Community Round almost always closes earlier (although it must be open for at least 21 days).  Additionally, some companies may do a "rolling close" after 21 days have passed and their minimum fundraising target is reached.

    When a Community Round closes earlier, you will receive a five-day notice before the closing date via email, and a 7-day countdown will be visible on the Community Round page.  

  • What happens if the Community Round fails?

    You'll be notified via email and receive a full refund of your investment and any fees you've paid.

  • How long will it take to receive my Wefunder Cash refund?

    You can expect your Wefunder Cash refund within 3-5 business days. We do our best to process these requests quickly, but any delays are typically due to fraud checks that we have in place to ensure that our investors and their money are safe.

  • How does currency conversion work for refunds?

    The amount of your refund depends on the exchange rate. When we refund you, the amount you get back reflects the exchange rate on the day we issue the refund. Exchange rates change every day so the amount you get back won’t always match what you paid. The US dollar value of your payment and your refund will always be the same. We collect and refund online payments in US dollars. When we issue a refund to a card using another currency, your bank will convert it from US dollars for you. We are not involved in this currency exchange process.

Legal

  • Which offerings am I legally allowed to invest in?

    It depends on whether you’re an accredited or non-accredited investor. If you’re accredited, you can participate in all security offers. If you are non-accredited, you can invest in Reg A+ and Reg CF offers.

    We do not allow investors from certain sanctioned countries, including Cuba, Iran, North Korea, Russia, Syria, and Ukraine's Donetsk, Crimea, and Luhansk regions.

  • What’s an accredited investor?

    Accredited investors are wealthy: typically make over $200,000 per year ($300,000 if joint with a spouse) or have over $1M in assets, minus their primary residence.

    To find out your investment limits, open an investor account.

  • How do I verify my accredited status?

    If you meet the qualifications for accreditation and would like to verify your status, you'll need to submit documentation that confirms your income or net worth. You can do this in your settings (www.wefunder.com/settings).

    How can individuals qualify as accredited?

    • Income over $200,000 per year for the last two years and expect to remain the same
    • Income over $300,000 per year for the last two years if joint with a spouse
    • Net worth over $1 million, excluding the primary residence
    • Investment professionals in good standing holding the general securities representative license (Series 7), the investment adviser representative license (Series 65), or the private securities offerings representative license (Series 82).

    How can entities qualify as accredited?

    • Entities owning investments in excess of $5 million
    • The following entities with assets in excess of $5 million: corporations, partnerships, LLCs, trusts, 501(c)(3) organizations, employee benefit plans, “family office,” and any “family client” of that office.
    • Entities where all equity owners are accredited investors.

    If you meet any of those qualifications and would like to verify your accredited status, we will need you to submit documentation confirming your income or net worth according to the criteria listed above.

    What forms/documents are acceptable to prove accreditation?

    *Just so you know, all documentation must have the investor's full name and date of the document.

    • Letter from a lawyer, accountant, dealer-broker, or investment advisor indicating that they have seen the investor’s financials and can confirm that they meet the accreditation requirements.
    • Tax forms like W-2s, 1099s, K-1s, etc.
    • Certificates of deposit, tax assessment, or appraisals.
    • Proof of license for Series 7, 65, or 82.
    • If the investor is foreign and uploads foreign documents, you can convert the currency into USD to determine if they meet the threshold

    You can upload these forms in your settings (www.wefunder.com/settings). Click the verify button for accreditation and upload. Our Investor Success team reviews these requests Monday-Friday. Please allow one business day for processing.

  • How much am I allowed to invest?

    It's complicated.  Thankfully, when you sign up for a Wefunder account, we'll do all these calculations for you.


    The amount you are legally allowed to invest depends on which Regulation the company uses to fundraise.

    Wefunder calculates your annual investment limit for Regulation Crowdfunding offerings based on the net worth and income provided upon account opening. Investment limits are for every 12-month period. Every investment in a Regulation Crowdfunding offering counts towards the annual limit. We will not let you invest more than this amount. The SEC made it pretty complicated to calculate this number, but if you're curious:

    - Everyone can invest at least $2,500
    - If your net worth or income is below $124k, you may legally invest a maximum of 5% of the greater number.
    - If your net worth and income are above $124k, you may legally invest a maximum of 10% of the greater number, up to a max of $124k.
    - Accredited investors can invest as much as they'd like in Reg CF offerings.

    For Regulation A+ offerings, unaccredited investors can invest up to 10% of income or net worth per year, whichever is greater.

    Only accredited investors may invest in Regulation D offerings, and they have no limits.

    Just so you know, for any investment higher than $25k, we require proof of accreditation regardless.

  • Can I invest if I don't live in the United States?

    We have investors from all around the world! With a few exceptions, we accept investments from international investors as long as you represent that you are complying with the law in your country. Here's a step-by-step guide on investing from outside the US.

    The only exceptions are the Canadian Provinces of Quebec, Ontario, and Alberta which have requested that we bar their residents from investing on our platform, as well as certain sanctioned countries, including Cuba, Iran, North Korea, Russia, Syria, and the Donetsk, Crimea, and Luhansk regions of Ukraine.

  • Can I invest via an entity?

    Yes, you can invest via an entity. You can add or update an entity to link to your Wefunder account by visiting wefunder.com/settings and navigating to "Add Entity." Once you do that, all your future investments will use that entity when selected; just be sure to check the box that says "Invest via Fund or Trust" on the investing page, and you should be all set! To change the entity on any existing investments, you will have to gain the approval of each company and go through them to change the contract.

    Note: If you are investing via a trust, you will use your SSN as you represent the trust and use the title of Trustee. If you are investing via another entity type, you will use the EIN provided when the entity was created. You do not need to enter an SSN/EIN for international investors.

    It's important to know that the legal name on your profile should NOT be the name of your entity - it should be the person representing the entity. We'll need this if you try to verify your identity on the platform. However, it is acceptable to use your entity as the public name on your profile.

  • Can I add a spouse or beneficiary to my investment?

    Our platform does not currently support adding a beneficiary to your account. However, we have a straightforward process when someone writes in needing a beneficiary transfer. Our Investor Success team is ready to help through those difficult times and make the transfer easy and painless. Simply have them write to support@wefunder.com, and they will take care of you.

  • A company is citing one of the “SEC’s Temporary Amendments” in their financial disclosures section... What the heck does this mean?

    Due to the impact of COVID on small business, the SEC issued a temporary relief order with a few amendments meant to ease the process for companies looking to raise. You can read the full order here, if you're curious. Some of these amendments center on how a company must go about disclosing its finances. 


    Here were the pre-existing guidelines:

    - A company intending to raise up to $107k had to produce 2 years of GAAP (Generally Accepted Accounting Principles) statements certified by its principal executive officer.
    - A company intending to raise more than $107k had to produce CPA-reviewed statements.

    Here's what the temporary relief order changes (note that these changes only apply if a company has been incorporated for at least 6 months): 

    - A company intending to raise up to $250k can produce 2 years of GAAP (Generally Accepted Accounting Principles) statements certified by its principal executive officer. 
    - A company     intending to raise more than $250k must produce CPA-reviewed statements.
    - A company     can file a Form C (read: launch a campaign) without any financial statements, provided they’re added in prior to the company accepting investments. Basically, this means that every company must disclose financials to actually accept any money from investors but some companies are exempt from including their financial info when initially filing their offering.

  • A (super) quick guide to investing via an entity.

    To make an investment via an entity, you don't need to create a new Wefunder account! As you're making the investment through your account, you will change the "Investor Info" from investing as yourself to your entity using the dropdown menu (you may need to click edit on box 2 to get this option). If you don't have an entity listed in your account, you can click the option that says "+ Add New Entity". Based on how you want to invest, you can toggle this on and off as you make each investment on Wefunder.

    Please note that your account legal name should be YOUR name as the manager of the entity. You are allowed to put your entity name as your public name if you wish to do so.

  • How do oversubscriptions work?

    When a company gets more investment commitments than they're allowed to close on, their campaign is "oversubscribed". Under Regulation Crowdfunding, a company can legally raise a maximum of $5M in a 12-month period. Companies may also set a lower funding goal to avoid some extra legal work.

    When a round is oversubscribed, investments are accepted on a first-come, first-serve basis, unless the issuer requests a different setup.


Troubleshooting

  • How do I complete my investor account?

    Fill in all the information on your investor profile. 

  • How do I change my password?

    To change your password, go to wefunder.com/settings. Find Password and choose Reset to create a new password.


  • I forgot my password.

    No worries! If you forgot your password, go to wefunder.com/login and click Forgot Password. Enter your email address and we'll send you a link to reset your password. 


  • I need to change the name on my investment.

    If your investment has not been confirmed, you can reach out to our Investor Success Team for help (support@wefunder.com).  If the investment is already closed, you will need to contact the company you have a contract with to make this change. Once the company has approved the change, then we will be able to update our copy of the contract on our end.

  • How are contracts signed?

    Everything is handled electronically. You sign a contract when you apply to invest. The founder will sign the contract after the fundraise closes and finalizes the raise. Once the founder countersigns, you'll be to find the contract in your portfolio.

  • I get too many emails. Can I unsubscribe?

    To unsubscribe from Wefunder emails, go to your email settings. You can subscribe to certain categories of emails and only receive emails that are relevant to you. Such categories include the following:

    You will still receive emails from Wefunder relating to transactions and account activity.  In addition, you will still receive updated from companies you have invested in and that are on your watchlist. If you wish to no longer receive those, you can change the last setting to "never".

  • How can I ask the founders questions?

    For any company currently fundraising, you can ask the founders questions directly on the fundraise page by clicking the "Ask a Question" tab. Founders monitor this forum and answer as they are able.


  • When will I receive my perks?

    The founder(s) of the company you invested in should reach out shortly after the fundraise has ended and finalized with information on how to claim any perk(s) you may have. If you do not hear from them, you will need to contact the company as they are the ones that take care of perks. Please note: Wefunder does not monitor or facilitate the perks that a company offers during their raise.


  • Can I make an investment as a gift?

    Investing in startups on Wefunder is a bit different than the stock market - contracts are not easily transferrable and the person who will own the security needs to also be the person who consents to invest. 

    That said, there are plenty of companies on Wefunder that sell cool stuff that make awesome gifts! Feel free to browse through our Explore page.

Contact

  • How can I contact Wefunder?

    We have several ways for investors to communicate with us:

    • Email - support@wefunder.com (Responses within 24 hours or less.)
    • Online Chat (Available when logged into your account, M-F, 10:00 am-5:30 pm PST.)
    • Phone - 628-266-4770 (Available M-F, 10:00 am-5:30 pm PST.)*

    *Wefunder only accepts scheduled phone calls. To schedule a phone call with Wefunder, please contact our Investor Success Team at support@wefunder.com.

Tax Primer For Investors

  • What Tax Forms Should I Expect to Receive?

    • Schedule K-1. If you invested through an LLC (Limited Liability Company) — for example, investments directly into an LLC raising on Wefunder or investments in a fundraise using an SPV (Special Purpose Vehicle) — you will receive a Schedule K-1 in tax years where the LLC incurred a taxable gain or loss.

    You can figure this out through the investment contract, which you can find in your portfolio page.

    • Form 1099. If you received a payment from a company you invested in — for example, a quarterly payment on a revenue share contract — you may receive a Form 1099.

    You can view all your tax documents here.

    This is for educational purposes only, and should not be construed as tax or legal advice.

    Questions? Reach out to support@wefunder.com

  • Does Wefunder Send Tax Forms to Investors?

    • SPV Fundraises. If you invested in a fundraise that used an SPV, Wefunder will work with our accounting partners to generate and distribute Schedule K-1s in tax years where the SPV incurred a taxable gain or loss (note, this may not be every year). You can check whether you invested via an SPV by opening the investment contract available on your portfolio page.
    • Non-SPV Fundraises. For fundraises not using an SPV, the company you invested in has the obligation to generate tax forms for its investors. In some cases, Wefunder helps distribute these forms to investors once the company has generated them.
    • Loans & Revenue Share Investments. If you invested in a loan or revenue share contract, the company you invested in has the obligation to generate and send you a Form 1099 in years where they have made payments to you. In some cases, Wefunder helps distribute these forms to investors once the company has generated them. You can check whether you invested in a loan or revenue share contract by opening the investment contract available on your portfolio page.

    This is for educational purposes only, and should not be construed as tax or legal advice.

    Questions? Reach out to support@wefunder.com

  • When Will I Receive My Schedule K-1 for the Prior Tax Year?

    We provide tax documents to investors as soon as they become available to help investors file their taxes on time.

    • By February 15: Wefunder will notify investors via their email as to which investments we expect will require a Schedule K-1. If you are not notified, then we do not expect you’ll receive a Schedule K-1 this year.
    • By March 15: Wefunder will provide an update on your Schedule K-1 if it has not already been uploaded to your account.
    • By April 15: Wefunder will upload your tax documents to your Wefunder Tax Document Center, which includes a Schedule K-1 and other related documents (as needed). Note: If we cannot produce your tax documents by this date, we’ll notify you by email to file an extension with the IRS.
    • By September 15: Wefunder will upload all remaining tax documents that require an extension.

    This is for educational purposes only and should not be construed as tax or legal advice.

    Questions? Reach out to support@wefunder.com

Getting Started

  • What is Wefunder?

    We help everyone invest as little as $100 in the startups they love.  

    You can think of us as “Kickstarter for investing.” 

    Unlike Kickstarter, you are not buying a product or donating to an artist. Instead, you are investing in a business hoping to earn a return on your investment. 

    You decide which companies are worthy of funding. If the business does well, you may make money.  If it doesn’t do well, you lose all your money. 

    Either way, you join a community of other investors who seek to help the startup succeed. You sometimes get neat perks from the companies too. 

  • How is Wefunder different from the stock market?

    Startups on Wefunder are much earlier-stage than companies listed on the NASDAQ or the New York Stock Exchange. Here are a few significant differences:

  • Wait… how is this legal?

    Starting in May of 2016, thanks to a new law called Regulation Crowdfunding, it became legal for everyone to invest small amounts of money in the startups they believed in. 

    From 1933 to 2016, investing in a private company was illegal unless you were an “accredited investor” (i.e., wealthy).

    We started Wefunder to fix that because we weren’t rich and wanted to invest in our friends. The first thing we had to do was convince Congress to change the law. We managed to do that, and here we are today! 

  • Why should I invest in startups?

    It shouldn't be to make lots of money! This isn't the stock market. Startups are much riskier and more likely to fail.  Greed is a wrong reason to invest.

    Of course, if you invest wisely, you can make money.  Our advice?  Invest only in what you understand (and preferably love). If you are a customer and love the product, it’s more likely a good investment. If you don’t understand it, investing may be a bad idea. 

    Our opinion is that investing should not be solely about earning a return. To invest in something as risky as a startup, you should feel something extra beyond just the business model.  For us, that “something extra” is the fulfillment we feel helping a founder take "their shot" at making our world slightly better. We also think it’s pretty cool to learn about different industries when we get updates from the founder.

  • Any tips for a first-time investor on Wefunder?

    Our advice?  Start slow.

    1. Expect to lose it all. Only invest what you can afford to lose.

    2. Only invest in what you understand. Preferably a product or mission that you love.

    3. Do your research. You also can ask the founders a question on their company profile.

    4. Diversify. It’s better to make multiple small investments rather than one large one. Plus, it’ll help you learn more.

    5. Look at the Lead Investor.  Has a more experienced investor invested in the company under the same terms as you?  Why are they investing?

    For more tips, head to Startup Investor School – an entire video series of guidance from the world's best startup investor, Y Combinator.

    Note that these are tips, not investment *recommendations,* and you should make your own decisions when deciding what to invest in.

  • What kind of companies are on Wefunder?

    As we like to say, nearly the entire American economy! That’s the fun part! We’ve funded tens of millions of dollars in startups like:

    • Moonshots like flying cars, space telescopes, and fusion reactors
    • Neighborhood businesses like cafés, restaurants, and breweries
    • Software like mobile apps and online education
    • Biotechnology, like glowing plants and researching cancer cures
    • Entertainment like Hollywood studios and immersive theater
    • And much more!

    The one commonality? All companies that raise successfully on Wefunder have a loyal community of people who believe in them. 

  • After I invest, how often should I expect updates?

    Wefunder recommends that founders update their investors at least once per quarter, but at the very least, two updates yearly. If you see a company that still needs to provide this update, contact our team at support@wefunder.com, and we will be happy to ask the founders for an update.

    Most companies are also legally required to issue an Annual Report 120 days after the end of their fiscal year. The annual report is a comprehensive update with their latest financials, board members, new financings, and more. Sometimes, they may no longer be required to file this information, though we encourage them to do so anyway. Most companies have their fiscal year end on December 31st, and their annual reports come out by April 30th. 

  • Is Wefunder regulated?

    Yes!  The SEC and FINRA wrote around 1,000 pages of regulations we work diligently to comply with.

  • Where does my money go after I invest?

    Wefunder is prohibited by law from touching your money.

    When you invest, your funds are transferred to an escrow account in the custody of Silicon Valley Bridge Bank.  If the raise succeeds, your money will be released to the startup. Otherwise, it will be refunded to you. 

  • Do you recommend good investments?

    No!  It’s illegal for us to endorse or recommend any company. 

    But even if it wasn’t illegal, we don’t want Wefunder to be a “gatekeeper” that picks and chooses which ideas are worthy of funding. That’s for you to decide.

    No company on Wefunder – no matter where it appears on our website – is endorsed by us.  Also, while we may sometimes help companies “make their profiles look pretty,” all of this information is provided and fact-checked as accurate by the companies, not us.     

    While we don’t vet ideas, we do our best to screen for fraud, such as researching the founders and verifying that the documents they’ve provided comply with the law. 

  • Why did you create Wefunder?

    Initially, we created it for ourselves. We wanted to invest in our friends.  We also wanted to support causes we cared about with our dollars, like revitalizing American manufacturing or researching cancer. We see every startup as a social movement to change the world in one specific way. We wanted to join more of those movements and help where possible. 

    That’s also why we became a Public Benefit Corporation.  We aim to make capitalism work better by sprinkling the Silicon Valley fairy dust across the rest of America. We want to help thousands more potential founders get off the ground and take their shot. 

    Join us!

Risks

  • Just how risky are startups?

    Very! You should only invest what you can afford to lose. Only invest so much that it won't impact your lifestyle or retirement plans. Every investment on Wefunder is much riskier than a public company on the stock market. You may lose every dollar you invest on Wefunder.

  • How can I decrease the risk?

    You are more likely to avoid loss by diversifying your investments, focusing on areas in which you have the expertise, and investing in startups whose products you passionately use. Even professional investors have difficulty predicting how startups will earn money in the future (e.g., Google in 1999). Investing in what you know and find personally valuable is an important signal of a good investment.

  • How many investments should I make?

    We recommend making several small investments each year rather than one large one. For instance, if you decide you can safely invest $5,000 per year in startups, it'll be less risky to make ten $500 investments instead of a single $5,000 one. You should only invest what you can afford to lose.

  • Is an equity investment appropriate for me?

    The answer is yes if you can afford to lose every dollar you invest on Wefunder and wait 7+ years for a return.

    You might strongly believe in a company's future success, but it's safer to think of an equity investment as a lottery ticket that might pay off in the long term.

    Unlike the stock market, investment outcomes are much more binary (complete failure or wild success). No stock market allows you to easily re-sell your investment stake to someone else unless the company is acquired or prepares for an IPO.

  • Is a debt investment appropriate for me?

    Compared to equity investments, loans can be slightly less risky but have a smaller upside. Assuming that even a loan would not be paid back would be best. Only invest what you can afford to lose. 

  • Can I easily resell my investment?

    It's safest to assume you cannot resell your investment to another investor. First, there has yet to be a liquid secondary market like the New York Stock Exchange for private companies. Regulation Crowdfunding also specifically prohibits the resale of securities except to the issuer, an accredited investor, a family member, or their trust.

  • Will my percentage ownership be diluted?

    Yes. An equity stake will almost certainly be diluted.

    Successful startups host many rounds of financings, all the way to an IPO. For each financing, the startup issues additional stock to the new investors. This is healthy and normal as long as the company's value increases with each funding round. For example, the first investor in Facebook, Peter Thiel, originally purchased ~10% of the company for $500,000. By 2011, that stake was diluted to under 3% but estimated to be worth ~$2 billion.

    Sometimes, when things are not going well, the startup can go bankrupt or raise more money in a "down round," which means the company's value has decreased since the last financing. This is very bad for the founders and past investors; the dilution happens rapidly. But it's preferable to the startup going bankrupt and the investors losing everything.

  • Will the startup use Wefunder in the future?

    Wefunder provides startups with free continued access to our platform, but they are not guaranteed to continue using our services.

Lead Investors

  • What is a Lead Investor?

    The Lead Investor is an investor who is familiar with the startup and decided to invest on the same terms as those offered on Wefunder.  More importantly, the Lead Investor directs the voting power of all Wefunder investors and can take other actions on behalf of investors.

    When deciding whether to invest in a company, you should look at who the Lead Investor is, see how much they invested and why, and make your own decision on if you trust their judgement. 

    Note that Wefunder does not endorse the views or activities of any Lead Investor and our approval of a Lead Investor does not constitute an investment recommendation.

  • What does a Lead Investor do?

    The Lead Investor:

    1. Decides if they want to invest on the same terms as those offered on Wefunder.

    2. Directs the signing of documents on behalf of all investors on Wefunder, such as SAFEs converting to equity, follow-on financing authorizations, acquisitions, or any other corporate action. These are the same documents a Lead signs for their personal investment.

    Note that Wefunder does not endorse the views or activities of any Lead Investor and our approval of a Lead Investor does not constitute an investment recommendation.

  • Do I have voting rights?

    All offerings on Wefunder will have information about the voting rights of the securities sold. When voting rights are offered, these voting rights are directed by the Lead Investor.  

  • Can we fire a Lead Investor?

    Yes. If there is evidence of behavior that is in bad faith or a serious conflict of interest, Wefunder can intervene in extraordinary circumstances. 

    Depending on the circumstances, Wefunder can remove the Lead Investor, organize a vote of all Wefunder investors on whether to remove the Lead Investor, and/or organize a vote of all Wefunder investors on a particular voting decision for which the Lead Investor has a conflict of interest.  

  • Will the Lead Investor be paid?

    No, they won't be compensated for their role as a Lead Investor. But, they may be appointed as portfolio manager to an SPV formed by Wefunder in a future Reg D round, for which they could receive carried interest.

SPVs & More

  • How do SPVs work?

    To ease logistical burden for founders and solve problems with having too many stockholders on the cap table, we are now using special-purpose vehicle (SPVs) for most new fundraises. This means we'll set up an LLC that exists for the sole purpose of investing in each startup. All investors pool their capital into the SPV, which then invests in the company as 1 entity. If there are early bird terms, a separate SPV will be set up to hold the early bird investors. 

    We'll set up these SPVs at no extra charge to companies or investors.

  • Why do startups use SPVs?

    Startups use SPVs to ensure their future growth and follow-on financings won’t be at risk. Having too many individual stockholders can make venture capitalists skeptical, require companies to go public before they're ready, and make gathering stockholder approvals a challenge. 

    With an SPV, founders can have an unlimited number of smaller investors grouped into one large entity, with voting power directed by a Lead Investor.

    For more info on how SPVs solve some tricky legal issues in structuring investments, see here.

  • Who manages the SPV?

    For most new SPVs, the manager is Wefunder Admin, LLC, who then delegates voting decisions to the Lead Investor.

    For legacy Reg D SPVs and those set up for certain purposes such as investing in follow-on financings, the manager is Wefunder Advisors, LLC.

    The manager of the relevant SPV is indicated in the Subscription Agreement that investors sign when they invest through an SPV.

  • Will I be investing via the custodian or SPV?

    It depends on the offering. If the company is using the custodian or SPVs, that will be clearly indicated in the legal disclosures in their Form C. 

    As of March 15th 2021, we have seen many companies use SPVs, although some companies still choose to use the custodian. 

    Most raises that launched between May 2020 and March 15th, 2021 used the custodian. 

  • What is a Custodian?

    A Custodian is an entity (such as a broker-dealer, bank, or transfer agent) that holds any securities on behalf of all investors (who are the "beneficial owners" of the securities).  

    This means investors do not actually possess the shares, convertible notes, or SAFEs. Instead, the Custodian holds them on their behalf. All voting rights of securities are delegated to the Lead Investor, who directs the Custodian on how it should vote the investor securities. This makes the Custodian the only entity listed on the cap table, because it is the record holder of all the securities. 

    On Wefunder, XX Investments LLC - an SEC-registered transfer agent - acts as Custodian for all securities sold on the platform that use the Custodian structure.


  • Why are my securities held by the Custodian?

    Using a Custodian increases the quality of startups that use Wefunder while also giving more voting power to investors on Wefunder. 

    • Access to higher-quality investments.  With a Custodian, higher-quality startups with other fundraising options are more willing to use Wefunder. Startups use a Custodian to ensure 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). With a Custodian, all those smaller investors are represented by one entity on the cap table: XX Investments LLC. 

    • Concentrate investor voting power into one Lead Investor.  Before Custodians, almost no companies that crowdfunded offered voting rights to their investors.  Now, all voting rights are held by the Custodian, which must vote as directed by the Lead Investor.

Earning a Return

  • How do I earn a return?

    The amount you may earn depends on the type of investment contract the company is offering.

    There are four classes on Wefunder:

    • Debt.  Some local businesses offer a simple loan or revenue share.  A simple loan, just like your car loan, has a fixed repayment schedule known in advance.  Unlike a loan, a revenue share returns a fixed amount of money (such as 2X your investment), but the time it takes to repay depends on how well the business does.  The faster the business grows revenue, the faster you earn a return, and the higher your effective interest rate.  

    • Convertibles. Most early-stage technology startups use a Convertible Note or Simple Agreement for Future Equity. These will convert your investment to stock at a later date if the company raises a "priced round" from major investors, most often venture capitalists. At this point, you are a shareholder owning equity, and you earn a return if the value of that stock goes up over time, and you are able to sell it.

    • Stock, No Dividends. When a startup is at a stage where they can afford to pay lawyers tens of thousands of dollars, they will do a "priced round". Like the stock market, you are buying equity at a fixed price per share (or unit for LLCs). If the company is successful, the value of the stock can increase with each subsequent round of financing, until the company is acquired or goes public. Then you earn a return.

    • Stock, Dividends.  While a tech startup almost never offers dividends, a later-stage local business - such as a brewery opening a second location - often will.  The type of dividend can vary.  Some might offer a fixed dividend per share per year. Some might offer a percentage of profits.  A common scenario is also to "swap" the dividend after your investment is repaid.  For instance, a brewery might share 80% of its profits until the investors are repaid, and then 20% thereafter in perpetuity.

  • How long until I see a return?

    The amount of time it takes to see a return is highly dependent on the type of investment contract.

    • Debt. A simple loan will define the number of months until it is paid back. For a revenue share, it depends on their projections for future revenue. The faster the business makes money, the faster you will see a return.

    • Convertibles & Stock with No Dividends. You are waiting until the company goes public or is acquired. This can take a very long time. It took the early investors in Harmonix (the creators of Guitar Hero) over 10 years to earn a return.

    • Stock with Dividends.  This depends on the specific investment agreement. Typically, dividends are a percentage of profits. Therefore, the amount of time to see a return depends on how profitable the business is.

  • How is the valuation determined?

    Market demand determines the valuation. Valuation shifts with time, depending on the amount of capital chasing startups. Right now, early-stage high-growth startups are often valued at $3 to $20 million for their first financing. Lifestyle businesses are valued at less. Companies that have raised several rounds of financing and are further along are worth far more.

    In order to get a sense if a valuation seems reasonable, look at who the Lead Investor is.  How experienced are they?  How much did they invest under the same terms?  

  • Where can I get more advice on how to invest wisely?

    One of the best early-stage investing firms - measured by objective returns - is Y Combinator.  They were the first investors in Reddit, Dropbox, Airbnb, Stripe, and over 100 more startups now worth over $100 million.  

    Head over to Startup Investor School – an entire video series of investor tips created by YC. 

  • Does my investment qualify for QSBS tax exemption?

    In theory, you should be able to claim the Qualified Small Business Stock (QSBS) tax exemption on the investments made on Wefunder the same way you could for any early-stage business that meets the requirements of Section 1202 of the tax code.

    The QSBS tax exemption has a variety of requirements, including:

        - The company is a US C-Corp with less than $50M in gross assets at the time the stock is issued (including the money raised in the financing)

        - At least 80% of the company's assets must be used in operating a "qualified trade or business," which excludes: personal services; banking, insurance, financing, leasing, or investing; farming; mining; or operating a hotel, motel, or restaurant

        - The investor is not a corporation, acquires the stock at its original issuance (ie., not a secondary purchase), and holds the stock for at least 5 years

    Read more on QSBS requirements here. 

    We can’t guarantee that any investments made on Wefunder will qualify for QSBS. If you have questions on eligibility, we recommend speaking with your tax advisor. You can also ask founders whether they have looked into QSBS eligibility by leaving a comment on the company’s Ask a Question page.

Investment Contracts

  • What is a SAFE?

    A SAFE grants an investor the right to obtain equity at a future date if the startup sells shares in future financing. Top startups have historically used it in Silicon Valley to raise money from accredited angel investors. You should only invest in a SAFE if you believe the startup can raise financing in the future from professional investors.

    Early-stage startups use SAFEs to delay the difficult task of figuring out how much a startup is worth. It's also a much cheaper and simpler contract than priced equity Community Rounds, which may require months of negotiation and upwards of 30 pages of legalese, costing tens of thousands of dollars.

    The number of shares you receive is determined at the subsequent priced financing when professional investors – typically venture capitalists – set the price for preferred stock. Then, calculated using the Valuation Cap and sometimes the Discount Rate, your SAFE often converts into shares at a lower price than the venture capitalists paid since you invested earlier.

    The Valuation Cap is the most important term in this security. It puts a maximum price on the stock price - the lower the price, the more shares you will get. If you invest in a startup with a valuation cap of $8 million, and they later raise at a $20 million Pre-Money Valuation, the amount of stock you'll get will be priced off the $8 million number. But, if the subsequent investors value the company at $4 million, that will be your price instead (perhaps further discounted by the Discount Rate).

    Unlike a Convertible Note, a SAFE is not a loan. As such, it does not accrue interest, have a maturity date, or have a legal obligation to be paid back. This makes it a simpler and cheaper way to finance a startup, and it typically better aligns with the intention of most early-stage equity investors who never intended to be lenders (convertible notes are rarely, if ever, paid back in cash despite being a debt instrument – the startup goes bankrupt).

    Further Reading:

  • What is a Convertible Note?

    A convertible note is an unsecured loan that converts to stock at some point in the future. They are one the most popular forms of seed-stage startup investing because of their history, although the SAFE is rapidly becoming more prevalent.

    Convertible notes are also helpful because they delay the difficult task of figuring out how much the startup is worth. The number of shares you receive is determined at the subsequent qualified financing (typically $1 million) when venture capitalists set the price for preferred stock. Then, calculated using the Valuation Cap, Discount Rate, and Interest Rate, your loan converts into shares at a lower price than the venture capitalists paid since you invested earlier.

    If the startup does not raise another round of funding, the note becomes due at the maturity date, typically in 18-24 months. Convertible notes, however, are rarely repaid in cash. Instead, the note usually converts to equity at a pre-set target price.

    The discount and interest rates have a relatively minor impact on future returns. The most important term to focus on – which can significantly impact the price of your future shares – is the Valuation Cap. This is usually set between $3 to $20 million, depending on how "hot" the startup is.

    Learn more about convertible notes     here.

  • How does Preferred Stock work?

    As a non-lead investor investing a small amount, the essential terms to pay attention to are the Post-Money Valuation or the Pre-Money Valuation. This is effectively what the company is considered to be worth; with it, you can calculate your percentage ownership. Comparatively, the price of the stock is relatively meaningless.

    Most priced round contracts for venture-backed companies are based on the National Venture Capital Association templates. 

    Read more about the NVCA documents.
    Learn more about terms.

  • How do revenue share or loans work?

    High-growth startups rarely raise seed-stage funding with loans, as debt doesn't offer enough return to account for the risk investors are taking.

    However, loans or promissory notes can be more appropriate for cash-generating small businesses. One benefit of investing with a loan is that the investor receives cash every quarter or year, as the principal is repaid alongside the interest rate. The downside of debt is you have no equity stake if the company suddenly becomes much more valuable.

    A Wefunder Revenue Share Loan Agreement is a promissory note paid back from a share of the business's revenues.  

    Important terms in this note include:

    • Gross or Net Revenues. Net revenues exclude returns or shipping costs.
    • Revenue Percentage. This is the percentage of revenue that is shared.
    • Repayment Amount. Typically 1.5-3.0X, this is the maximum amount you will be paid back.
    • Quarterly or Annual Disbursement. Companies choose to make annual or quarterly payments.
    • Defer Payments. By default, every company can miss one payment without being in default.
    • Secured. Some loans may be secured with all property of the business.

    Some businesses choose not to share their revenue and instead offer something more like a car loan, using the Wefunder Promissory Note.  Important terms in this note include:

    • Interest Rate. The interest rate per annum.
    • Maturity Date. How many years until the loan is fully paid back?
    • Quarterly or Annual Disbursement. Companies choose to make annual or quarterly payments.
    • Grace Period. By default, these loans are deferred until 30 days after their crowdfunding deadline date. Some businesses may defer the start of their loan at a later date, such as when their business is scheduled to open.
    • Defer Payments. By default, every company can miss one payment without being in default. This is meant to allow businesses time to recover if they have a bad year.
    • Secured. Some loans may be secured with all property of the business.
    • Personal Guarantee. Some loans may have an individual that personally guarantees payment.
    • Subordination. Some loans are subordinate to a major bank lender.

  • Does Wefunder suggest the terms of Community Rounds?

    It is up to each company to set the terms of their Community Round. 

    Wefunder sometimes provides advice or guidance to companies on what the right terms might be. We base this advice on a number of factors, including the company's stage of development, metrics such as revenue and user growth, industry, market size, comparable companies, and the overall state of the market. Wefunder may also refuse to host a particular Community Round if we believe the terms offered are unreasonable.

Payment

  • What are my payment options?

    You can pay using a bank transfer (US only), check (for investments $1000+), credit card, Apple Pay, Google Pay, or wire transfer (international investors only). If you choose to pay by credit card, Apple Pay, or Google Pay, there is a $10,000 limit.

    International investors can pay by wire transfer – we recommend TransferWise. You'll likely have to fund your Wefunder Cash (wefunder.com/cash) account with a wire, and then make your commitment to a specific company.

  • Do my funds enter an escrow account?

    Yes. Your investment is placed in a third-party escrow account hosted by Silicon Valley Bridge Bank or Vitesse PSP. Funds are transferred to the business only after the Community Round goal has been met.

  • How long do I have to send a payment?

    You can send your payment in at any time during the Community Round, but you will want to make sure we have the payment by the time the Community Round closes, or your investment application will be automatically canceled. 

  • How do I check my payment status?

    You can go ahead and head over to your portfolio page to see the status of your payment. The portfolio page will show you where you are in the process of successfully submitting your application to invest. If the investment says pending, this is not necessarily referring to a payment. This may mean that we are waiting on the investment to finalize before it can be confirmed if you are accepted into the Community Round. If you need to edit your investment, you can do this here if the Community Round is still open, not oversubscribed, and your funds have yet to be sent to the company.

  • My payment failed. Help!

    When a payment fails, we send you an email. You'll need to follow the instructions in the email to fix the failed payment. 

    If you didn't get the email, you can find which of your investments is awaiting payment on your portfolio page.

  • I'm an international investor and I need the IBAN number.

    We do not have an IBAN. You should be able to send a BIC/SWIFT wire through your bank. We recommend using TransferWise.

    If this proves difficult, you may need to contact investor support at support@wefunder.com.

    Complete international investor guide here.

  • What fees do investors pay?

    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.

    Investors can get their first investment fee-free by completing the welcome sequence when creating their account (www.wefunder.com/welcome) and using their ACH bank account (US banks only) or a wire. Just so you know, this only applies to first investments.

    Fees are one-time and are not reoccurring.

  • Why is my investment still pending?

    Your investment may still be pending because we are still processing your payment, you have action items to complete, or we are waiting for the Community Round to finalize.

    If your payment is still processing, here are our typical processing times.

    • Bank Transfers (ACH): It takes approximately 3-5 business days to confirm that funds are deposited.
    • Checks: Once the check is deposited into our third-party escrow account, they will send us the payment information, and we will credit your account. Checks typically take 5-7 business days for us to receive and reconcile them.
    • Wire Transfers: Once the wire is deposited into our third-party escrow account, they will send us the payment information, and we will credit your account. Wires typically take 3-5 business days (5-7 business days for international) for us to receive and reconcile them because there are several intermediary banks that they typically have to go through, and then occasionally a delay when it hits our escrow account and notifies our system.
    • Credit cards settle instantly if you are in a pinch for time. We highly recommend this if a raise is close to closing.

    Include your unique investment ID on your wire or check to avoid potential delays.

    If you're paying by wire or check, please provide additional information about the payment to help us reconcile it. To do so, after you've sent out the wire / check, log into Wefunder, go to your portfolio page, and enter the information that asks you to "provide payment info." 

    If your investment application has action items, you'll need to complete those to submit the application successfully. You will need to provide your SSN (required for all investments), verify your identity (once your collective investments are more than $2,500), or verify accreditation status if you indicate you are an accredited investor or are making an investment over $25,000.

    If all of those are complete and your investment looks like it was submitted successfully, we are waiting for the Community Round to finalize. You will typically see a date for when this will happen on the timeline located on your portfolio page. Just so you know, this date is just an estimate, and times may vary.

  • Why do you need my SSN?

    When investing on Wefunder, you need to provide a tax ID to invest. Tax ID generally means an SSN for an individual and an EIN for a company. We require these because when the company you invest in makes a distribution to investors (for example, if they get acquired), we’ll need to provide tax documents to you, such as a Form K-1, which requires us to include your SSN. If we don't receive your SSN, your investment will be canceled.

    We know you might be hesitant to provide this information, but we guard your SSN like our life depends on it. 

    We encrypt and store Social Security Numbers (SSNs) on a separate group of servers from wefunder.com. We use an RSA key to encrypt the SSN and isolate the private key from production machines. Access to the database storing encrypted SSNs is restricted within Wefunder on a need-to-know basis. We have a policy for access if and when an employee may need to view an individual's SSNs (for example, if we're preparing a tax filing or investigating fraud).

  • I've been waitlisted. What does that mean?

    Some investors are waitlisted when many apply to invest, and the company receives more money than they can legally accept. 

    It is common for a Community Round to have a rush of investors as it gets closer to reaching its desired amount, which can create misunderstandings on exactly "when" it becomes oversubscribed. 

    We can only fully confirm investments after the Community Round ends, and our Wefunder Closing Team works with the company to get everything in order. Our automatic emails regarding the company will all mention the waitlist, including if you invested before it was oversubscribed, which took a bit to process. You could be successful in Reg CF but still, receive a waitlist email.

    In an oversubscription situation, investments are accepted on a first-come, first-served basis unless the issuer requests a different setup.

  • Why is my investment still in escrow?

    To execute your investment, there are a bunch of SEC guidelines and regulations we have to abide by.  Sometimes, it can take several months to finalize a Community Round after it closes. Once your funds have been sent to the company, and your contract is countersigned, your investment will be marked as confirmed.

  • Why is my total investment less than I committed?

    We do not issue fractional shares, so we round down your commitment.

    For instance, if a company's share price is $20, and you commit $250, we'll lower your commitment to $240 to purchase 12 shares.

    However, you will still be eligible for any perks you were expecting at that requested $250 level. Each company will manage the disbursement of perks after all contracts have been finalized. 

  • What is Wefunder Cash?

    Your Wefunder Cash account is your online wallet with Wefunder. Literally, our third-party banking partner, Silicon Valley Bridge Bank, holds the money.

    Transferring funds to your Cash account right after making a reservation helps you to invest faster – you can apply funds from there once you confirm an investment.

    Any funds you transfer into your Cash account can be withdrawn anytime or used to fund a company. 

    More on Wefunder Cash & reservations here.

  • What exactly is a reservation?

    When making a reservation, you are interested in a Community Round currently in what we call the "Testing The Waters (TTW)." This means they are taking reservations to gauge if they would have a successful Community Round. 

    When making a reservation, you will be asked how you intend to pay:

    • If paying by ACH, Wefunder will transfer the funds from your bank to your Wefunder Cash account (https://www.wefunder.com/cash). 
    • If paying by Wire, Wefunder will put a request to transfer funds to your Wefunder Cash account (https://www.wefunder.com/cash). The investor must use the directions in their account (also sent via email) to initiate the transfer from their bank.
    • If paying by Credit Card, Wefunder will pre-authorize their credit card to ensure it is active and can be charged. The pre-authorization will drop off the credit card holder's account within 48 hours.

    Why do you use Wefunder Cash?

    We utilize your Wefunder Cash account to calculate the reservation commitments towards a company's metrics. We can only legally take payments towards a company's escrow account once they file their Form C. The Community Round will do this with the help of Wefunder once they receive their minimum in reservations.

    Early Bird Terms and Contracts

    During the TTW period, terms, like money, cannot be legally tied to a reservation. This means that if the company offers Early Bird Terms, the investors who confirm their reservation into an investment first will get Early Bird Terms - not those who made a reservation first. Similarly, contracts are unavailable during this time as there are no contractual agreements for reservations in the TTW stage.

    What happens when the company files its Form C?

    When a company hits its goal, Wefunder will help that company file its Form C. Once that is complete, everyone who made a reservation will be emailed to confirm their reservation into an investment. When you do this, you can proceed with the payment method you originally intended or change to a new one. Investors will have the following options to pay:

    • ACH Transfer (US bank account only)
    • Credit Card - including Apple Pay and Google Pay (Limit $10,000 per investment.)
    • Wire Transfer (investments $1000+ only.)
    • Check (US only and investments $1000+)


    What if the company cancels its Community Round before filing its Form C? What if I don't want to confirm the reservation into an investment?

    If you or the Community Round cancel the reservation, you will be refunded any funds sent, including paid Wefunder fees.

Refunds

  • Can I cancel my investment and get a refund?

    Yes. You can change your mind anytime until a Community Round closes (or two days after you invest, if later), and you will receive a full refund, including any fees. Unfortunately, investments cannot be canceled after that time.

    You'll receive a five-day notice via e-mail when a Community Round is about to close. Additionally, we put a seven-day warning on the Community Round page to inform investors that it will close soon. You can cancel at any point up until the Community Round closes.

    Once the minimum funding target is met, many companies do a "rolling close," where investments that have successfully applied to invest are executed, and funds are transferred. However, the Community Round is still open to receive new investments. You'll still receive a five-day notice if this occurs. Once your funds are transferred to the company, you can no longer cancel your investment or obtain a refund. 

  • How will I receive a refund?

    When you cancel your investment, or a Community Round fails, a refund, including fees, will automatically be sent back to the bank account or credit card used to invest. 

    If you send a check or a wire, your money will be refunded to your Wefunder Cash account. From there, you can refund the money to your bank account (US banks only) or wire the funds to your bank (international investors only.) Unfortunately, we cannot refund any check payment via check, as stated when you chose this option to pay. These refunds must be completed by bank transfer or wire transfer. 

    We can also refund investments in Wefunder credit, which can be used toward future investments and fees!

  • How long will it take to receive my refund?

    We initiate refunds as we receive them, but it can take a few weeks to reach you, especially if you invested with a check or wire or from abroad. Our typical refund timeframes are as follows:

    • ACH Bank (US) - Within 3-5 Business Days
    • Credit Card - Within 3 Business Days
    • Wire (US) - Within 5-7 Business Days
    • Wire (International) - Within 7-10 Business Days
    • Wefunder Credits - Same Day

  • What are the limits on canceling an investment?

    Once the Community Round has a close date, you'll receive a 5-day notice. In addition, you will see a 7-day countdown on the Community Round page. You have up until the Community Round closes to cancel.

    Once the minimum funding target is met, some companies do a "rolling close," where investments that have successfully applied are executed, and funds are transferred. However, the Community Round is still open to receive new investments. 

    You'll still receive a five-day notice when any close is about to happen.

  • Can the company not accept my investment?

    Yes.  Companies may choose not to accept your investment for any reason. One reason may be that they discovered you worked for a major competitor.

    After the Community Round closes and the company has countersigned the contract and received the funds, your investment can no longer be canceled.

  • When will the Community Round close?

    The Community Round will close for sure at the company's offering deadline. 

    However, a successful Community Round almost always closes earlier (although it must be open for at least 21 days).  Additionally, some companies may do a "rolling close" after 21 days have passed and their minimum fundraising target is reached.

    When a Community Round closes earlier, you will receive a five-day notice before the closing date via email, and a 7-day countdown will be visible on the Community Round page.  

  • What happens if the Community Round fails?

    You'll be notified via email and receive a full refund of your investment and any fees you've paid.

  • How long will it take to receive my Wefunder Cash refund?

    You can expect your Wefunder Cash refund within 3-5 business days. We do our best to process these requests quickly, but any delays are typically due to fraud checks that we have in place to ensure that our investors and their money are safe.

  • How does currency conversion work for refunds?

    The amount of your refund depends on the exchange rate. When we refund you, the amount you get back reflects the exchange rate on the day we issue the refund. Exchange rates change every day so the amount you get back won’t always match what you paid. The US dollar value of your payment and your refund will always be the same. We collect and refund online payments in US dollars. When we issue a refund to a card using another currency, your bank will convert it from US dollars for you. We are not involved in this currency exchange process.

Legal

  • Which offerings am I legally allowed to invest in?

    It depends on whether you’re an accredited or non-accredited investor. If you’re accredited, you can participate in all security offers. If you are non-accredited, you can invest in Reg A+ and Reg CF offers.

    We do not allow investors from certain sanctioned countries, including Cuba, Iran, North Korea, Russia, Syria, and Ukraine's Donetsk, Crimea, and Luhansk regions.

  • What’s an accredited investor?

    Accredited investors are wealthy: typically make over $200,000 per year ($300,000 if joint with a spouse) or have over $1M in assets, minus their primary residence.

    To find out your investment limits, open an investor account.

  • How do I verify my accredited status?

    If you meet the qualifications for accreditation and would like to verify your status, you'll need to submit documentation that confirms your income or net worth. You can do this in your settings (www.wefunder.com/settings).

    How can individuals qualify as accredited?

    • Income over $200,000 per year for the last two years and expect to remain the same
    • Income over $300,000 per year for the last two years if joint with a spouse
    • Net worth over $1 million, excluding the primary residence
    • Investment professionals in good standing holding the general securities representative license (Series 7), the investment adviser representative license (Series 65), or the private securities offerings representative license (Series 82).

    How can entities qualify as accredited?

    • Entities owning investments in excess of $5 million
    • The following entities with assets in excess of $5 million: corporations, partnerships, LLCs, trusts, 501(c)(3) organizations, employee benefit plans, “family office,” and any “family client” of that office.
    • Entities where all equity owners are accredited investors.

    If you meet any of those qualifications and would like to verify your accredited status, we will need you to submit documentation confirming your income or net worth according to the criteria listed above.

    What forms/documents are acceptable to prove accreditation?

    *Just so you know, all documentation must have the investor's full name and date of the document.

    • Letter from a lawyer, accountant, dealer-broker, or investment advisor indicating that they have seen the investor’s financials and can confirm that they meet the accreditation requirements.
    • Tax forms like W-2s, 1099s, K-1s, etc.
    • Certificates of deposit, tax assessment, or appraisals.
    • Proof of license for Series 7, 65, or 82.
    • If the investor is foreign and uploads foreign documents, you can convert the currency into USD to determine if they meet the threshold

    You can upload these forms in your settings (www.wefunder.com/settings). Click the verify button for accreditation and upload. Our Investor Success team reviews these requests Monday-Friday. Please allow one business day for processing.

  • How much am I allowed to invest?

    It's complicated.  Thankfully, when you sign up for a Wefunder account, we'll do all these calculations for you.


    The amount you are legally allowed to invest depends on which Regulation the company uses to fundraise.

    Wefunder calculates your annual investment limit for Regulation Crowdfunding offerings based on the net worth and income provided upon account opening. Investment limits are for every 12-month period. Every investment in a Regulation Crowdfunding offering counts towards the annual limit. We will not let you invest more than this amount. The SEC made it pretty complicated to calculate this number, but if you're curious:

    - Everyone can invest at least $2,500
    - If your net worth or income is below $124k, you may legally invest a maximum of 5% of the greater number.
    - If your net worth and income are above $124k, you may legally invest a maximum of 10% of the greater number, up to a max of $124k.
    - Accredited investors can invest as much as they'd like in Reg CF offerings.

    For Regulation A+ offerings, unaccredited investors can invest up to 10% of income or net worth per year, whichever is greater.

    Only accredited investors may invest in Regulation D offerings, and they have no limits.

    Just so you know, for any investment higher than $25k, we require proof of accreditation regardless.

  • Can I invest if I don't live in the United States?

    We have investors from all around the world! With a few exceptions, we accept investments from international investors as long as you represent that you are complying with the law in your country. Here's a step-by-step guide on investing from outside the US.

    The only exceptions are the Canadian Provinces of Quebec, Ontario, and Alberta which have requested that we bar their residents from investing on our platform, as well as certain sanctioned countries, including Cuba, Iran, North Korea, Russia, Syria, and the Donetsk, Crimea, and Luhansk regions of Ukraine.

  • Can I invest via an entity?

    Yes, you can invest via an entity. You can add or update an entity to link to your Wefunder account by visiting wefunder.com/settings and navigating to "Add Entity." Once you do that, all your future investments will use that entity when selected; just be sure to check the box that says "Invest via Fund or Trust" on the investing page, and you should be all set! To change the entity on any existing investments, you will have to gain the approval of each company and go through them to change the contract.

    Note: If you are investing via a trust, you will use your SSN as you represent the trust and use the title of Trustee. If you are investing via another entity type, you will use the EIN provided when the entity was created. You do not need to enter an SSN/EIN for international investors.

    It's important to know that the legal name on your profile should NOT be the name of your entity - it should be the person representing the entity. We'll need this if you try to verify your identity on the platform. However, it is acceptable to use your entity as the public name on your profile.

  • Can I add a spouse or beneficiary to my investment?

    Our platform does not currently support adding a beneficiary to your account. However, we have a straightforward process when someone writes in needing a beneficiary transfer. Our Investor Success team is ready to help through those difficult times and make the transfer easy and painless. Simply have them write to support@wefunder.com, and they will take care of you.

  • A company is citing one of the “SEC’s Temporary Amendments” in their financial disclosures section... What the heck does this mean?

    Due to the impact of COVID on small business, the SEC issued a temporary relief order with a few amendments meant to ease the process for companies looking to raise. You can read the full order here, if you're curious. Some of these amendments center on how a company must go about disclosing its finances. 


    Here were the pre-existing guidelines:

    - A company intending to raise up to $107k had to produce 2 years of GAAP (Generally Accepted Accounting Principles) statements certified by its principal executive officer.
    - A company intending to raise more than $107k had to produce CPA-reviewed statements.

    Here's what the temporary relief order changes (note that these changes only apply if a company has been incorporated for at least 6 months): 

    - A company intending to raise up to $250k can produce 2 years of GAAP (Generally Accepted Accounting Principles) statements certified by its principal executive officer. 
    - A company     intending to raise more than $250k must produce CPA-reviewed statements.
    - A company     can file a Form C (read: launch a campaign) without any financial statements, provided they’re added in prior to the company accepting investments. Basically, this means that every company must disclose financials to actually accept any money from investors but some companies are exempt from including their financial info when initially filing their offering.

  • A (super) quick guide to investing via an entity.

    To make an investment via an entity, you don't need to create a new Wefunder account! As you're making the investment through your account, you will change the "Investor Info" from investing as yourself to your entity using the dropdown menu (you may need to click edit on box 2 to get this option). If you don't have an entity listed in your account, you can click the option that says "+ Add New Entity". Based on how you want to invest, you can toggle this on and off as you make each investment on Wefunder.

    Please note that your account legal name should be YOUR name as the manager of the entity. You are allowed to put your entity name as your public name if you wish to do so.

  • How do oversubscriptions work?

    When a company gets more investment commitments than they're allowed to close on, their campaign is "oversubscribed". Under Regulation Crowdfunding, a company can legally raise a maximum of $5M in a 12-month period. Companies may also set a lower funding goal to avoid some extra legal work.

    When a round is oversubscribed, investments are accepted on a first-come, first-serve basis, unless the issuer requests a different setup.


Troubleshooting

  • How do I complete my investor account?

    Fill in all the information on your investor profile. 

  • How do I change my password?

    To change your password, go to wefunder.com/settings. Find Password and choose Reset to create a new password.


  • I forgot my password.

    No worries! If you forgot your password, go to wefunder.com/login and click Forgot Password. Enter your email address and we'll send you a link to reset your password. 


  • I need to change the name on my investment.

    If your investment has not been confirmed, you can reach out to our Investor Success Team for help (support@wefunder.com).  If the investment is already closed, you will need to contact the company you have a contract with to make this change. Once the company has approved the change, then we will be able to update our copy of the contract on our end.

  • How are contracts signed?

    Everything is handled electronically. You sign a contract when you apply to invest. The founder will sign the contract after the fundraise closes and finalizes the raise. Once the founder countersigns, you'll be to find the contract in your portfolio.

  • I get too many emails. Can I unsubscribe?

    To unsubscribe from Wefunder emails, go to your email settings. You can subscribe to certain categories of emails and only receive emails that are relevant to you. Such categories include the following:

    You will still receive emails from Wefunder relating to transactions and account activity.  In addition, you will still receive updated from companies you have invested in and that are on your watchlist. If you wish to no longer receive those, you can change the last setting to "never".

  • How can I ask the founders questions?

    For any company currently fundraising, you can ask the founders questions directly on the fundraise page by clicking the "Ask a Question" tab. Founders monitor this forum and answer as they are able.


  • When will I receive my perks?

    The founder(s) of the company you invested in should reach out shortly after the fundraise has ended and finalized with information on how to claim any perk(s) you may have. If you do not hear from them, you will need to contact the company as they are the ones that take care of perks. Please note: Wefunder does not monitor or facilitate the perks that a company offers during their raise.


  • Can I make an investment as a gift?

    Investing in startups on Wefunder is a bit different than the stock market - contracts are not easily transferrable and the person who will own the security needs to also be the person who consents to invest. 

    That said, there are plenty of companies on Wefunder that sell cool stuff that make awesome gifts! Feel free to browse through our Explore page.

Contact

  • How can I contact Wefunder?

    We have several ways for investors to communicate with us:

    • Email - support@wefunder.com (Responses within 24 hours or less.)
    • Online Chat (Available when logged into your account, M-F, 10:00 am-5:30 pm PST.)
    • Phone - 628-266-4770 (Available M-F, 10:00 am-5:30 pm PST.)*

    *Wefunder only accepts scheduled phone calls. To schedule a phone call with Wefunder, please contact our Investor Success Team at support@wefunder.com.

Tax Primer For Investors

  • What Tax Forms Should I Expect to Receive?

    • Schedule K-1. If you invested through an LLC (Limited Liability Company) — for example, investments directly into an LLC raising on Wefunder or investments in a fundraise using an SPV (Special Purpose Vehicle) — you will receive a Schedule K-1 in tax years where the LLC incurred a taxable gain or loss.

    You can figure this out through the investment contract, which you can find in your portfolio page.

    • Form 1099. If you received a payment from a company you invested in — for example, a quarterly payment on a revenue share contract — you may receive a Form 1099.

    You can view all your tax documents here.

    This is for educational purposes only, and should not be construed as tax or legal advice.

    Questions? Reach out to support@wefunder.com

  • Does Wefunder Send Tax Forms to Investors?

    • SPV Fundraises. If you invested in a fundraise that used an SPV, Wefunder will work with our accounting partners to generate and distribute Schedule K-1s in tax years where the SPV incurred a taxable gain or loss (note, this may not be every year). You can check whether you invested via an SPV by opening the investment contract available on your portfolio page.
    • Non-SPV Fundraises. For fundraises not using an SPV, the company you invested in has the obligation to generate tax forms for its investors. In some cases, Wefunder helps distribute these forms to investors once the company has generated them.
    • Loans & Revenue Share Investments. If you invested in a loan or revenue share contract, the company you invested in has the obligation to generate and send you a Form 1099 in years where they have made payments to you. In some cases, Wefunder helps distribute these forms to investors once the company has generated them. You can check whether you invested in a loan or revenue share contract by opening the investment contract available on your portfolio page.

    This is for educational purposes only, and should not be construed as tax or legal advice.

    Questions? Reach out to support@wefunder.com

  • When Will I Receive My Schedule K-1 for the Prior Tax Year?

    We provide tax documents to investors as soon as they become available to help investors file their taxes on time.

    • By February 15: Wefunder will notify investors via their email as to which investments we expect will require a Schedule K-1. If you are not notified, then we do not expect you’ll receive a Schedule K-1 this year.
    • By March 15: Wefunder will provide an update on your Schedule K-1 if it has not already been uploaded to your account.
    • By April 15: Wefunder will upload your tax documents to your Wefunder Tax Document Center, which includes a Schedule K-1 and other related documents (as needed). Note: If we cannot produce your tax documents by this date, we’ll notify you by email to file an extension with the IRS.
    • By September 15: Wefunder will upload all remaining tax documents that require an extension.

    This is for educational purposes only and should not be construed as tax or legal advice.

    Questions? Reach out to support@wefunder.com