How is a Lead Investor compensated?
The Lead Investor is compensated by XX to help your company succeed. Investors on Wefunder pay 10% of any of their profits on their investment to XX.
XX then shares these profits with the Lead Investor and any other partners at the XX who may help your company with office hours, connections, and advice. Typically, a Lead Investor receives 50% of the profits received by the XX (equivalent to a 5% “carried interest” stake).
The Lead Investor only makes money if your company increases in value and investors on Wefunder get a return. This compensation works like carried interest, except it is taxed like ordinary income. Lead Investors are incentivized to help your company succeed.
Your Lead Investor may also earn 5% carried interest from any SPVs we may form to invest in your company during follow-on financings.