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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 like “Kickstarter for investing”. 

    Unlike Kickstarter, you are not buying a product or donating to an artist. Instead, you are investing in a business with the hope of earning 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 public markets like the Euronext or London Stock Exchange. Here are a few big differences:

  • What kind of companies are on Wefunder?

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

    • Moonshots like flying cars, space telescopes, and fusion reactors
    • Neighborhood businesses like café’s, 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 of the companies that raise successfully on Wefunder have a loyal community of people who believe in them. 

  • 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 maintained by our payments partner, Vitesse PSP.  If the fundraise succeeds, your money will be released to the startup. Otherwise, it will be refunded to you. 

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

    Our advice?  Start off slow.

    1. Expect to lose it all. Never invest more than 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 over to Startup Investor School – an entire video series of tips 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.

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

    Wefunder recommends that founders update their investors at least once per quarter, but you can also ask the founders for an update in the Q&A section of their fundraise page.

    Most companies also file yearly financial statements with their local country's company registry. 

  • Wait… how is this legal?

    Starting in November 2021, thanks to a new law called the European Crowdfunding Service Provider Regulation, it became legal for everyone to invest small amounts of money in the startups they believed in.

    Before that, every country in the EU had their own rules on who could invest in private companies. Most countries had very restrictive rules which mainly limited these investments to "sophisticated investors" (i.e., the rich).

    We started Wefunder to fix this problem in the U.S., because we weren’t rich, and we wanted to invest in our friends. That's why we convinced the U.S. Congress to change the laws back in 2012. Now, we're expanding to bring private investing to investors of all sizes across Europe!  

  • Is Wefunder regulated?

    Yes!  The ESMA wrote an extensive set of regulations that we work diligently to comply with, and the Dutch AFM regularly keeps an eye on us.

  • Do you recommend good investments?

    No!  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 web site – 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 true 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 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 bad 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, then it’s more likely it’s a good investment. If you don’t understand it, it may be a bad idea to invest. 

    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 a slightly better place. We also think it’s pretty cool to learn about different industries when we get updates from the founder.

  • 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 money, like revitalizing small businesses 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 we could. 

    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 the world. We want to help thousands more potential founders get off the ground and take their shot. 

    Join us!

Risks

  • Is a debt investment appropriate for me?

    Compared to equity investments, loans can be slightly less risky, but also have a smaller upside. You should still assume that even a loan will not be paid back. Never invest more than you can afford to lose. 

  • Is an equity investment appropriate for me?

    If you can't afford to lose every dollar you invest on Wefunder, the answer is no. If you can't afford to wait 7+ years for a return, the answer is also no.

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

    Unlike the stock market, investment outcomes are much more binary (complete failure or wild success), and there's no stock market that'll allow you to easily re-sell your investment stake to someone else unless the company is acquired or prepares for an IPO.

  • 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. As long as the value of the company increases with each funding round, this is healthy and normal. For example, the first investor in Facebook, Peter Thiel, originally purchased ~10% of the company for $500,000. By 2011, that stake was diluted down to under 3%, but estimated to be worth ~$2 billion.

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

  • Can I easily resell my investment?

    It's safest to assume you cannot resell your investment to another investor. First, there is not yet a liquid secondary market like the Euronext for private companies (yet). Individual countries' laws and the governing documents of the startup you're investing in may also affect your ability to resell your shares. 

  • Will the startup use Wefunder in the future?

    Wefunder provides startups free continued access to our platform, but there is no guarantee they will continue using our services.

  • How can I decrease the risk?

    You are more likely to avoid loss by diversifying your investments, focusing on areas in which you have expertise, and investing in startups whose products you passionately use. Even professional investors have a difficult time predicting exactly 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 never invest more than you can afford to lose.

  • Just how risky are startups?

    Very! You should only invest what you can afford to lose. Do not invest so much that it would impact your lifestyle or retirement plans. Every investment listed on Wefunder is much riskier than a public company listed on the stock market. It is entirely possible that you will lose every dollar you invest on Wefunder.

Lead Investors

  • 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.  

  • How should I go about choosing a Lead Investor?

    If you have multiple options for a Lead Investor, that's great!  Here's how we recommend choosing, in this order of priority:

    1. Are they smart and do they get your business? You want someone who groks your long-term vision. 

    2. Do you think they can offer good advice?  When times get tough, it's good to be able to call on someone who has been there and done that.  We think former founders often make the best seed investors.  

    3. Do you like them personally?  Life is better if you follow the "no asshole" rule.

    4. Why do they want to invest in your company? You want a Lead Investor who can explain this passionately. This will appear on your Wefunder campaign page.

  • Who is qualified to be a Lead Investor?

    -  They invest at least €5,000 in your company on the same terms as other Wefunder investors.

    - They are not an officer, employee, a family member, or have a conflict of interest.

    - They are willing to provide a quote (text or video) to Wefunder investors about why they have agreed to be the Lead Investor.

    Note that the investor does not need to be a professional or sophisticated investor in order to serve as the Lead Investor. 

  • Do I need to give up control of my company to the Lead Investor?

    While the Lead Investor should have normal rights that professional angel investors enjoy, we don't advocate that founders lose control of their companies.  

    We believe the best investments come from founders who remain in control, driven by a long-term view of the impact they want to make. It is now common for founders to remain in voting control of their companies at the Series A.

    However, to use Wefunder, founders must now offer investment contracts that a normal angel investor in their region would sign.

  • 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 advises Wefunder on how to direct the voting power of all Wefunder investors and 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?

    To raise on Wefunder, you must find and choose a Lead Investor to invest on the same terms. Your Lead acts on behalf of all Wefunder investors – theirs is the only signature you need to authorize corporate actions like converting a SAFE or note, initiating a follow-on financing, or getting acquired.

  • Who chooses the Lead Investor?

    You do, with our approval. Before you launch your Wefunder raise, we must mutually agree on who the Lead Investor is.  

    Your investors on Wefunder must know who the Lead Investor is before they finalize their investment and are no longer eligible for a refund.

    Note that Wefunder's approval of a Lead Investor does not constitute an endorsement of any company or a recommendation to invest.  

  • What if I don't yet have a Lead Investor?

    We suggest choosing from your professional network or from the Wefunder investors that back your company during the campaign. We can give you advice and help make introductions if necessary, but if possible it's best to choose someone from your network who you already have a relationship of trust with.

    Unfortunately, if you can't find a Lead, you won't be able to withdraw any money you raise on Wefunder.

    Note that Wefunder's advice and/or approval of a Lead Investor does not constitute an endorsement of any company or a recommendation to invest.

  • Will the Lead Investor be paid?

    Some Lead Investors who help introduce a company to Wefunder may receive carried interest - that is, a portion of any future profits the investments make. Otherwise, they not compensated for their role as Lead Investor.

  • 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.  

  • 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. Advises Wefunder on 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.

SPVs & More

  • Who holds my securities?

    When you invest in an offering using the Nominee, your securities are held on your behalf by Wefunder Investments Ltd., an Irish limited company.

  • 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, cause legal issues, 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.

  • Who manages the SPV?

    Wefunder sets up and manages the SPV on behalf of investors. 

    Details on the managing entity are indicated in the Subscription Agreement that investors sign when they invest through an SPV.

  • How do SPVs work?

    To ease the logistical burden for founders and solve problems with having too many stockholders on the cap table, some fundraises now use special-purpose vehicle (SPVs). This means we'll set up an entity 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.

  • Why are my securities held by the Nominee?

    Using a Nominee 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 Nominee, higher-quality startups with other fundraising options are more willing to use Wefunder. Startups use a Nominee 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 Nominee, all those smaller investors are represented by one entity on the cap table: Wefunder Investments Ltd. 

    • Concentrate investor voting power into one Lead Investor.  Without a Nominee, companies would be very unlikely to offer voting rights to their investors.  Now, all voting rights are held by the Nominee, which votes as directed by the Lead Investor.
  • What is a Nominee?

    A nominee is an entity that serves as the registered owner of investments held for the benefit of investors, who hold the beneficial (ie., economic) interests in those investments.

    This means the nominee is the only entity listed in the shareholder register, and it holds the investments in trust on behalf of the beneficial owners. 

    On Wefunder, Wefunder Investments Ltd. (an Irish private limited company) acts as nominee for all securities sold on the platform that use the nominee structure. All voting rights of securities are delegated to a Lead Investor, who directs the nominee on how it should vote the investor securities and make other decisions on behalf of investors.

  • Will I be investing via a Nominee or SPV?

    It depends on the offering. If the company is using a Nominee or SPV, that will be clearly indicated in the legal disclosures in their Key Investment Information Sheet.

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. 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 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 $2 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. 

  • 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.

Investment Contracts

  • How does Preferred Stock work?

    As a non-lead investor investing a small amount, the most important 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, and with it, you can calculate your percentage ownership. Comparatively, the price of the stock is relatively meaningless.

    Learn more about terms.

  • What is a SAFE?

    A SAFE grants an investor the right to obtain equity at a future date if the startup sells shares in a future financing. It has been historically used by top startups in Silicon Valley raising money from accredited angel investors. You should only invest in a SAFE if you believe that 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 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 next priced financing when professional investors – typically venture capitalists – set the price for preferred stock. Then, calculated by 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 price of the stock - 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 next 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 just 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 useful 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 next qualified financing (typically $1 million), when venture capitalists set the price for preferred stock. Then, calculated by 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 is usually extended or converted 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 greatly impact the price of your future shares – is the Valuation Cap. This is usually set between $2 to $20 million, depending on how "hot" the startup is.

    Learn more about convertible notes 
    here.

  • Does Wefunder suggest the terms of fundraises?

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

    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 fundraise if we believe the terms offered are unreasonable.

  • How do revenue share or loans work?

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

    However, loans or promissory notes can be more appropriate for small businesses that are cash-generating. One benefit of investing with a loan is that the investor often 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.

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

    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.

Payment

  • How long do I have to send a payment?

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

  • Where are my funds held until the fundraising is completed?

    All payments by EU investors are processed by Stripe and/or Vitesse, depending on your payment method. Stripe processes certain types of payments and transmits those funds into an account maintained by Vitesse. Vitesse holds those funds in a segregated account until the fundraising is complete.

  • My payment failed. Help!

    When a payment fails, we send you an email. You can 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.

  • What fees do investors pay?

    For payments made by bank transfers and wires, 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 3.5% fee, with a minimum of €8 and no maximum.

    In exchange for our ongoing management and administration of investments, Wefunder receives 10% of any profits that are ultimately earned by investors over and above the original investment amount.

    Fees are one time and are not reoccurring.

  • Why is my total investment less than I committed?

    We do not issue fractional shares, so depending on the structure, we may round down your commitment.

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

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

  • Why is my investment still in escrow?

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

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

    Some investors are waitlisted when a large number of people apply to invest and the company receives more money than they can legally accept. 

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

    We will not be able to fully confirm investments until after the campaign ends and our Wefunder Closing Team works with them to get everything in order. Our automatic emails regarding the company will all mention the waitlist, including if you invested before it was oversubscribed and it just took a bit to process. You could be successfully in the offering, but still receive a waitlist email.

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

Refunds

  • Can I cancel my investment and get a refund?

    Yes. You can change your mind anytime up until a fundraise closes (or 4 days after you invest, if later) and you will receive a full refund, including any fees. Unfortunately, investments cannot be cancelled after that time.

    You'll receive a five-day notice via e-mail when a fundraise is about to close. Additionally, we put a 7 day warning on the fundraise page to let investors know that it will be closing soon. You can cancel at any point up until the fundraise closes (or 4 days after you invest, if later).

    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, but the 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 no longer can cancel your investment or obtain a refund. 

  • What happens if the fundraise fails?

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

  • 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 wire or from abroad. Our typical refund timeframes are as follows:

    - SEPA Bank (EU) - Within 3-5 Business Days
    - Credit Card - Within 3 Business Days
    - Wire (International) - Within 7-10 Business Days
    - Wefunder Credits - Same Day

  • How will I receive a refund?

    When you cancel your investment or a campaign fails, a refund, including fees, will automatically be sent back to the bank account or credit card that was used to make the investment. 

    We can also refund investments in Wefunder credit, which can be used toward future investments and fees. If you prefer this option, shoot us an email at support@wefunder.com.

  • 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 round closes, and the company has countersigned the contract and received the funds, your investment can no longer be cancelled.

  • What are the limits on canceling an investment?

    Once the fundraise has a close date you'll receive a 5-day notice. In addition, you will see a 7-day countdown on the fundraise page. You have up until the fundraise closes to cancel (or 4 days after you invest, if later).

    Once the minimum funding target is met, some companies do a "rolling close", where investments that have successfully applied are executed and funds transferred, but the campaign is still open to receive new investments. If your funds are disbursed as part of this rolling close, you may not cancel and receive a refund.

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

  • When will the fundraising round close?

    The fundraise round will close for certain at the company's offering deadline. 

    However, almost always, a successful fundraise closes earlier.  Additionally, some companies may do a "rolling close" after their minimum fundraising target is reached.

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

  • How does currency conversion work for refunds?

    If you invest with an account that's denominated in a different currency than the campaign you're investing in (eg., you use a USD account to invest in a Euro-denominated campaign), your funds will be converted at the time of your investment. If you later receive a refund - say you cancel your investment or the campaign fails - your funds will be converted back at the then-current exchange rate. 

    For example, let's say you use a USD-denominated account to invest €1000 in an EU campaign. Based on the exchange rate at that time, you send $1100 for your investment. A month later, you cancel your investment. Wefunder will send you back €1000, which will convert to USD at the then-current exchange rate. This may result in you being refunded more or less than the $1100 you initially sent.

Legal

  • What’s an accredited investor?

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

  • How much am I allowed to invest?

    For ECSP offerings, there are no investment limits. Investors must be shown a risk warning for investments above the greater of €1000 or 5% of their net worth.

    For Regulation D offerings, only accredited investors may invest, and they have no limits.


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

    Unfortunately, we do not offer joint investments. Each contract must be between the individual investor and the founder of the company receiving the investment. There should only be one person per 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).

    Here's what we'll accept:

    - A letter from a lawyer, accountant, deal-broker, or investment advisor indicating that they have seen your financials and can confirm that you meet the accreditation requirements.
    - Tax forms like W-2s, 1099s, K-1s, etc.
    - Certificates of deposit , tax assessment, or appraisals.
    - If you're investing from outside the US, convert your country's currency into USD to determine if you meet the threshold.

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

    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.

    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.

  • Which offerings am I legally allowed to invest in?

    It depends on whether you’re an accredited or non-accredited investor, and where you're located.

    If you live outside the US, you can invest ECSP offers. If you live in the US and are not accredited, you can invest in Reg CF and Reg A offers. If you’re accredited (regardless of where you live) you can inveset in Reg D offers.

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

Troubleshooting

  • How are contracts signed?

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

  • 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.


  • 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.

  • I need to change the name on my investment.

    Please reach out to our Investor Success Team for help (support@wefunder.com).

  • How do I complete my investor account?

    Fill in all the information on your investor profile

  • 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.


  • 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. 


Getting Started

  • What is Wefunder?

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

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

    Unlike Kickstarter, you are not buying a product or donating to an artist. Instead, you are investing in a business with the hope of earning 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 public markets like the Euronext or London Stock Exchange. Here are a few big differences:

  • What kind of companies are on Wefunder?

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

    • Moonshots like flying cars, space telescopes, and fusion reactors
    • Neighborhood businesses like café’s, 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 of the companies that raise successfully on Wefunder have a loyal community of people who believe in them. 

  • 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 maintained by our payments partner, Vitesse PSP.  If the fundraise succeeds, your money will be released to the startup. Otherwise, it will be refunded to you. 

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

    Our advice?  Start off slow.

    1. Expect to lose it all. Never invest more than 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 over to Startup Investor School – an entire video series of tips 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.

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

    Wefunder recommends that founders update their investors at least once per quarter, but you can also ask the founders for an update in the Q&A section of their fundraise page.

    Most companies also file yearly financial statements with their local country's company registry. 

  • Wait… how is this legal?

    Starting in November 2021, thanks to a new law called the European Crowdfunding Service Provider Regulation, it became legal for everyone to invest small amounts of money in the startups they believed in.

    Before that, every country in the EU had their own rules on who could invest in private companies. Most countries had very restrictive rules which mainly limited these investments to "sophisticated investors" (i.e., the rich).

    We started Wefunder to fix this problem in the U.S., because we weren’t rich, and we wanted to invest in our friends. That's why we convinced the U.S. Congress to change the laws back in 2012. Now, we're expanding to bring private investing to investors of all sizes across Europe!  

  • Is Wefunder regulated?

    Yes!  The ESMA wrote an extensive set of regulations that we work diligently to comply with, and the Dutch AFM regularly keeps an eye on us.

  • Do you recommend good investments?

    No!  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 web site – 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 true 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 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 bad 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, then it’s more likely it’s a good investment. If you don’t understand it, it may be a bad idea to invest. 

    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 a slightly better place. We also think it’s pretty cool to learn about different industries when we get updates from the founder.

  • 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 money, like revitalizing small businesses 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 we could. 

    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 the world. We want to help thousands more potential founders get off the ground and take their shot. 

    Join us!

Risks

  • Is a debt investment appropriate for me?

    Compared to equity investments, loans can be slightly less risky, but also have a smaller upside. You should still assume that even a loan will not be paid back. Never invest more than you can afford to lose. 

  • Is an equity investment appropriate for me?

    If you can't afford to lose every dollar you invest on Wefunder, the answer is no. If you can't afford to wait 7+ years for a return, the answer is also no.

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

    Unlike the stock market, investment outcomes are much more binary (complete failure or wild success), and there's no stock market that'll allow you to easily re-sell your investment stake to someone else unless the company is acquired or prepares for an IPO.

  • 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. As long as the value of the company increases with each funding round, this is healthy and normal. For example, the first investor in Facebook, Peter Thiel, originally purchased ~10% of the company for $500,000. By 2011, that stake was diluted down to under 3%, but estimated to be worth ~$2 billion.

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

  • Can I easily resell my investment?

    It's safest to assume you cannot resell your investment to another investor. First, there is not yet a liquid secondary market like the Euronext for private companies (yet). Individual countries' laws and the governing documents of the startup you're investing in may also affect your ability to resell your shares. 

  • Will the startup use Wefunder in the future?

    Wefunder provides startups free continued access to our platform, but there is no guarantee they will continue using our services.

  • How can I decrease the risk?

    You are more likely to avoid loss by diversifying your investments, focusing on areas in which you have expertise, and investing in startups whose products you passionately use. Even professional investors have a difficult time predicting exactly 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 never invest more than you can afford to lose.

  • Just how risky are startups?

    Very! You should only invest what you can afford to lose. Do not invest so much that it would impact your lifestyle or retirement plans. Every investment listed on Wefunder is much riskier than a public company listed on the stock market. It is entirely possible that you will lose every dollar you invest on Wefunder.

Lead Investors

  • 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.  

  • How should I go about choosing a Lead Investor?

    If you have multiple options for a Lead Investor, that's great!  Here's how we recommend choosing, in this order of priority:

    1. Are they smart and do they get your business? You want someone who groks your long-term vision. 

    2. Do you think they can offer good advice?  When times get tough, it's good to be able to call on someone who has been there and done that.  We think former founders often make the best seed investors.  

    3. Do you like them personally?  Life is better if you follow the "no asshole" rule.

    4. Why do they want to invest in your company? You want a Lead Investor who can explain this passionately. This will appear on your Wefunder campaign page.

  • Who is qualified to be a Lead Investor?

    -  They invest at least €5,000 in your company on the same terms as other Wefunder investors.

    - They are not an officer, employee, a family member, or have a conflict of interest.

    - They are willing to provide a quote (text or video) to Wefunder investors about why they have agreed to be the Lead Investor.

    Note that the investor does not need to be a professional or sophisticated investor in order to serve as the Lead Investor. 

  • Do I need to give up control of my company to the Lead Investor?

    While the Lead Investor should have normal rights that professional angel investors enjoy, we don't advocate that founders lose control of their companies.  

    We believe the best investments come from founders who remain in control, driven by a long-term view of the impact they want to make. It is now common for founders to remain in voting control of their companies at the Series A.

    However, to use Wefunder, founders must now offer investment contracts that a normal angel investor in their region would sign.

  • 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 advises Wefunder on how to direct the voting power of all Wefunder investors and 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?

    To raise on Wefunder, you must find and choose a Lead Investor to invest on the same terms. Your Lead acts on behalf of all Wefunder investors – theirs is the only signature you need to authorize corporate actions like converting a SAFE or note, initiating a follow-on financing, or getting acquired.

  • Who chooses the Lead Investor?

    You do, with our approval. Before you launch your Wefunder raise, we must mutually agree on who the Lead Investor is.  

    Your investors on Wefunder must know who the Lead Investor is before they finalize their investment and are no longer eligible for a refund.

    Note that Wefunder's approval of a Lead Investor does not constitute an endorsement of any company or a recommendation to invest.  

  • What if I don't yet have a Lead Investor?

    We suggest choosing from your professional network or from the Wefunder investors that back your company during the campaign. We can give you advice and help make introductions if necessary, but if possible it's best to choose someone from your network who you already have a relationship of trust with.

    Unfortunately, if you can't find a Lead, you won't be able to withdraw any money you raise on Wefunder.

    Note that Wefunder's advice and/or approval of a Lead Investor does not constitute an endorsement of any company or a recommendation to invest.

  • Will the Lead Investor be paid?

    Some Lead Investors who help introduce a company to Wefunder may receive carried interest - that is, a portion of any future profits the investments make. Otherwise, they not compensated for their role as Lead Investor.

  • 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.  

  • 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. Advises Wefunder on 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.

SPVs & More

  • Who holds my securities?

    When you invest in an offering using the Nominee, your securities are held on your behalf by Wefunder Investments Ltd., an Irish limited company.

  • 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, cause legal issues, 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.

  • Who manages the SPV?

    Wefunder sets up and manages the SPV on behalf of investors. 

    Details on the managing entity are indicated in the Subscription Agreement that investors sign when they invest through an SPV.

  • How do SPVs work?

    To ease the logistical burden for founders and solve problems with having too many stockholders on the cap table, some fundraises now use special-purpose vehicle (SPVs). This means we'll set up an entity 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.

  • Why are my securities held by the Nominee?

    Using a Nominee 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 Nominee, higher-quality startups with other fundraising options are more willing to use Wefunder. Startups use a Nominee 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 Nominee, all those smaller investors are represented by one entity on the cap table: Wefunder Investments Ltd. 

    • Concentrate investor voting power into one Lead Investor.  Without a Nominee, companies would be very unlikely to offer voting rights to their investors.  Now, all voting rights are held by the Nominee, which votes as directed by the Lead Investor.
  • What is a Nominee?

    A nominee is an entity that serves as the registered owner of investments held for the benefit of investors, who hold the beneficial (ie., economic) interests in those investments.

    This means the nominee is the only entity listed in the shareholder register, and it holds the investments in trust on behalf of the beneficial owners. 

    On Wefunder, Wefunder Investments Ltd. (an Irish private limited company) acts as nominee for all securities sold on the platform that use the nominee structure. All voting rights of securities are delegated to a Lead Investor, who directs the nominee on how it should vote the investor securities and make other decisions on behalf of investors.

  • Will I be investing via a Nominee or SPV?

    It depends on the offering. If the company is using a Nominee or SPV, that will be clearly indicated in the legal disclosures in their Key Investment Information Sheet.

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. 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 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 $2 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. 

  • 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.

Investment Contracts

  • How does Preferred Stock work?

    As a non-lead investor investing a small amount, the most important 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, and with it, you can calculate your percentage ownership. Comparatively, the price of the stock is relatively meaningless.

    Learn more about terms.

  • What is a SAFE?

    A SAFE grants an investor the right to obtain equity at a future date if the startup sells shares in a future financing. It has been historically used by top startups in Silicon Valley raising money from accredited angel investors. You should only invest in a SAFE if you believe that 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 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 next priced financing when professional investors – typically venture capitalists – set the price for preferred stock. Then, calculated by 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 price of the stock - 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 next 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 just 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 useful 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 next qualified financing (typically $1 million), when venture capitalists set the price for preferred stock. Then, calculated by 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 is usually extended or converted 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 greatly impact the price of your future shares – is the Valuation Cap. This is usually set between $2 to $20 million, depending on how "hot" the startup is.

    Learn more about convertible notes 
    here.

  • Does Wefunder suggest the terms of fundraises?

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

    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 fundraise if we believe the terms offered are unreasonable.

  • How do revenue share or loans work?

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

    However, loans or promissory notes can be more appropriate for small businesses that are cash-generating. One benefit of investing with a loan is that the investor often 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.

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

    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.

Payment

  • How long do I have to send a payment?

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

  • Where are my funds held until the fundraising is completed?

    All payments by EU investors are processed by Stripe and/or Vitesse, depending on your payment method. Stripe processes certain types of payments and transmits those funds into an account maintained by Vitesse. Vitesse holds those funds in a segregated account until the fundraising is complete.

  • My payment failed. Help!

    When a payment fails, we send you an email. You can 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.

  • What fees do investors pay?

    For payments made by bank transfers and wires, 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 3.5% fee, with a minimum of €8 and no maximum.

    In exchange for our ongoing management and administration of investments, Wefunder receives 10% of any profits that are ultimately earned by investors over and above the original investment amount.

    Fees are one time and are not reoccurring.

  • Why is my total investment less than I committed?

    We do not issue fractional shares, so depending on the structure, we may round down your commitment.

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

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

  • Why is my investment still in escrow?

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

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

    Some investors are waitlisted when a large number of people apply to invest and the company receives more money than they can legally accept. 

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

    We will not be able to fully confirm investments until after the campaign ends and our Wefunder Closing Team works with them to get everything in order. Our automatic emails regarding the company will all mention the waitlist, including if you invested before it was oversubscribed and it just took a bit to process. You could be successfully in the offering, but still receive a waitlist email.

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

Refunds

  • Can I cancel my investment and get a refund?

    Yes. You can change your mind anytime up until a fundraise closes (or 4 days after you invest, if later) and you will receive a full refund, including any fees. Unfortunately, investments cannot be cancelled after that time.

    You'll receive a five-day notice via e-mail when a fundraise is about to close. Additionally, we put a 7 day warning on the fundraise page to let investors know that it will be closing soon. You can cancel at any point up until the fundraise closes (or 4 days after you invest, if later).

    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, but the 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 no longer can cancel your investment or obtain a refund. 

  • What happens if the fundraise fails?

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

  • 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 wire or from abroad. Our typical refund timeframes are as follows:

    - SEPA Bank (EU) - Within 3-5 Business Days
    - Credit Card - Within 3 Business Days
    - Wire (International) - Within 7-10 Business Days
    - Wefunder Credits - Same Day

  • How will I receive a refund?

    When you cancel your investment or a campaign fails, a refund, including fees, will automatically be sent back to the bank account or credit card that was used to make the investment. 

    We can also refund investments in Wefunder credit, which can be used toward future investments and fees. If you prefer this option, shoot us an email at support@wefunder.com.

  • 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 round closes, and the company has countersigned the contract and received the funds, your investment can no longer be cancelled.

  • What are the limits on canceling an investment?

    Once the fundraise has a close date you'll receive a 5-day notice. In addition, you will see a 7-day countdown on the fundraise page. You have up until the fundraise closes to cancel (or 4 days after you invest, if later).

    Once the minimum funding target is met, some companies do a "rolling close", where investments that have successfully applied are executed and funds transferred, but the campaign is still open to receive new investments. If your funds are disbursed as part of this rolling close, you may not cancel and receive a refund.

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

  • When will the fundraising round close?

    The fundraise round will close for certain at the company's offering deadline. 

    However, almost always, a successful fundraise closes earlier.  Additionally, some companies may do a "rolling close" after their minimum fundraising target is reached.

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

  • How does currency conversion work for refunds?

    If you invest with an account that's denominated in a different currency than the campaign you're investing in (eg., you use a USD account to invest in a Euro-denominated campaign), your funds will be converted at the time of your investment. If you later receive a refund - say you cancel your investment or the campaign fails - your funds will be converted back at the then-current exchange rate. 

    For example, let's say you use a USD-denominated account to invest €1000 in an EU campaign. Based on the exchange rate at that time, you send $1100 for your investment. A month later, you cancel your investment. Wefunder will send you back €1000, which will convert to USD at the then-current exchange rate. This may result in you being refunded more or less than the $1100 you initially sent.

Legal

  • What’s an accredited investor?

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

  • How much am I allowed to invest?

    For ECSP offerings, there are no investment limits. Investors must be shown a risk warning for investments above the greater of €1000 or 5% of their net worth.

    For Regulation D offerings, only accredited investors may invest, and they have no limits.


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

    Unfortunately, we do not offer joint investments. Each contract must be between the individual investor and the founder of the company receiving the investment. There should only be one person per 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).

    Here's what we'll accept:

    - A letter from a lawyer, accountant, deal-broker, or investment advisor indicating that they have seen your financials and can confirm that you meet the accreditation requirements.
    - Tax forms like W-2s, 1099s, K-1s, etc.
    - Certificates of deposit , tax assessment, or appraisals.
    - If you're investing from outside the US, convert your country's currency into USD to determine if you meet the threshold.

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

    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.

    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.

  • Which offerings am I legally allowed to invest in?

    It depends on whether you’re an accredited or non-accredited investor, and where you're located.

    If you live outside the US, you can invest ECSP offers. If you live in the US and are not accredited, you can invest in Reg CF and Reg A offers. If you’re accredited (regardless of where you live) you can inveset in Reg D offers.

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

Troubleshooting

  • How are contracts signed?

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

  • 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.


  • 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.

  • I need to change the name on my investment.

    Please reach out to our Investor Success Team for help (support@wefunder.com).

  • How do I complete my investor account?

    Fill in all the information on your investor profile

  • 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.


  • 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. 


Can't find what you're looking for?

Email us: support@wefunder.com