- Does Wefunder curate the startups on its site?
- What is the default sorting of companies on Wefunder?
- Why isn't my live fundraise showing up on the Explore page?
- Can I pay to be featured more highly?
- Am I allowed to promote or advertise my fundraise?
- What legal restrictions are there on advertising?
- What can I say (or not say) in "real life" to the public?
- How should I set up my marketing strategy?
No. It's not our role to choose what is worthy of investment. We screen companies for signs of fraud, but we do not otherwise pass judgment.
Offerings are sorted by objective metrics including page views, press mentions, Twitter followers, Facebook likes, investment velocity, number of Wefunder followers, endorsements, ratings by users, and/or profile completeness. This algorithm CANNOT make good investment decisions. That's what some humans can do.
Companies are visible on the Explore page once they've raised $5,000.
Think about it from the investor's perspective: you're looking for investment opportunities and find a cool-looking company. But, there's a big fat $0 on the profile – they haven't raised any money yet. Would you invest? Or would you wait until a person who actually knows the founder invests first?
So, hop on the phone, tap into your network, and raise $5,000. Once you do, you'll automatically show up on the Explore page with some traction to show potential investors.
No. That would be unethical. It's also illegal. Every company that has ever asked us this question has looked super scammy.
You are allowed to promote if you use Regulation Crowdfunding, Regulation D Rule 506(c), or Regulation A+.
You are not allowed to advertise if you use Regulation D, Rule 506(b).
For Regulation Crowdfunding, you are only allowed to promote after your Form C is filed with the SEC. Oh, and never say the SEC has "approved" your offering. The SEC doesn't like that.
You are allowed to advertise any way you like - email, Facebook, shouting off the rooftops – whatever. However, all your advertisements must be limited to factual information (i.e. avoid saying you have the "best" cupcake shop in the world). Also, by law, all of your advertisements must include a link to your Wefunder profile.
If you haven't filed your Form C, you can ask people to "follow" your profile to show their support, but you cannot say something like: "We are going to fundraise on May 16th." Or: "As soon as we file with the SEC, we'll be raising at a $4 million valuation."
Check out the Legal Primer for more info.
For Regulation Crowdfunding, you are allowed to talk to the public about the facts of your business or products if you do not mention the terms of your fundraise.
The SEC's final rules on Regulation Crowdfunding are clear on this point:
In addition, the final rules do not restrict an issuer’s ability to communicate other information that might occur in the ordinary course of its operations and that does not refer to the terms of the offering.
If a stranger walks into your store and chats you up about investing, feel free to answer their questions about your business. Don't say non-factual things like: "We're the best cupcake shop in the world and we're gonna be HUGE!"
If they ask about terms of the offering, you must point them to your Wefunder profile, and they can only make an investment through Wefunder. You cannot accept money on their behalf.
For "Demo Days," you can mention you are on Wefunder during your presentation if you keep your presentation limited to facts and say nothing about the terms. Most credible demo days – such as those organized by Techstars or Y Combinator – already do not let their participants mention they are selling securities (or the terms of their offering) so as to not be deemed a "general solicitation" of securities that is forbidden for most Regulation D offerings.
That same rule applies for conferences. You may mention you are on Wefunder if you limit your discussion about your business to facts and do not mention the terms.
The key to a successful fundraise is managing momentum. The faster the investments come in, the more new investors will want to invest. Well-managed campaigns raise 30% of their total funding in the first week and 30% in the last week.
The most important thing you can do is to plan a big first day. That "pop" can spark the entire fundraise.
Prepare a list of all the people who are love what you are doing. Do you have any friends? Ask them to get ready. Have a mailing list of customers? Write an authentic personal email to them. Is this press-worthy? Don't hire a PR firm – instead write personal emails to reporters who cover similar topics.
It's also good to plan to start your fundraise when you know you'll have a bunch news-worthy updates coming out. Expect to sign up a key client soon? That'll be a great update to share with potential investors in week #2.