San Francisco-based WeFunder has raised $5.1 million in a funding round, according to a Form D filing. The startup helps individuals invest in startups through its crowdfunding platform, and has raised $15 million in equity funding to date, per filings. The company did not immediately respond to requests for comment.
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My first thought about WeFunder is its considerable similarity to two other startups: Angelist and Kickstarter.
According to WeFunder, AngelList is designed for “professionals” and is the “operating system for startups with a number of useful services.” WeFunder differentiates by allowing the regular ol’ Joe invest, not just accredited investors. It also claims it invests in a more diverse group of startups as well as the underrepresented founders that create them. Currently, it has investments in 40 out of the 50 states.
As for how WeFunder differs from Kickstarter, look no farther than the audience the former is trying to help: startupland. Kickstarter is a tad different, as it provides creative professionals a platform to raise funds for their projects, which it defines as “finite work with a clear goal that you’d like to bring to life. Think albums, books, or films.”
Now that we get how WeFunder has legs beyond two widely-known names, let’s learn how its competitive advantage came to be.
The startup was founded in 2012 by Mike Norman, Nick Tommarello, and Greg Belote, yet its offer comes from a May 2016 law: Regulation Crowdfunding. It became legal for everyone to invest small quantities of money in private companies, an opportunity that was before only allowed for “accredited investors” (usually of high net worth). The law lets you or me put $100 dollars into a coffee shop we really believe in, or an ostrich farm that promises returns.
According to its site, WeFunder has facilitated out $110 million in investments in startups through its platform. Those startups have gone on to get $2.2 billion in follow on investments. It claims its investment volume is larger than all of its competitors (StartEngine, SeedInvest, and Republic) combined.
It’s unclear exactly what the new capital will be used for, but for some indication we turned to the company’s FAQ which reads: “Our ambition is not to be a VC. We’re aiming to create a new type of stock market that can allocate more capital to all sorts of worthy businesses, be it a local community-supported coffee shop or the next Uber.”
Illustration: Li-Anne Dias