The post Wefunder Review: The Ultimate Guide for Investors by Caleb Naysmith appeared first on Benzinga. Visit Benzinga to get more great content like this.
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You have many choices for small business investment, each with a minimum $100 commitment. The platform gives you the option to filter choices by the following industry categories:
- Everything
- Technology
- Main Street
- Alcohol
- Hardware
- Software
- Entertainment
- Retail
- Infrastructure
- Food
You can sort results in order of most recently added (“New”), recently trending (“Trending”), almost fully funded (“Closing Soon”) and most funded.
Some recent startup examples include Token Metrics, a managed crypto-investing platform; UpCounsel, an online legal services marketplace; and SelfDecode, a DNA-based, AI-supported health platform.
Wefunder has a lengthy set of FAQs, each with a succinct and detailed answer. The support (or “FAQ & Educational Material”) page includes a section for startup investor FAQs, founder FAQs, term glossary and additional “stuff to read.” If you cannot find an answer to your question on the support page, you can email Wefunder at hello@wefunder.com.
The company also has social media accounts on Facebook (NASDAQ: FB), Twitter (NYSE: TWTR), LinkedIn, YouTube and Instagram.
An easily accessible live chat or customer support phone number would bring the rating to a 5/5.
The Investor FAQ Page Covers the Following Topics
- General questions (“getting started”)
- Risks
- Lead Investors
- Special Purpose Vehicles (SPVs) & Custodians
- Earning a Return
- Investment Contracts
- Payment
- Refunds
- Legal
- Troubleshooting
The Founder FAQ Page Covers the Following Topics
- Why Wefunder
- Basics
- Lead Investors
- SPVs & Custodians
- Pitches
- Investor Panels
- Investment Terms
- Form C
- Promotion
- After You Raise
The Glossary Page Covers the Following Topics
- Basic Jargon
- Exemptions
- Contracts
- Deal Terms
- Disclosures
- Financials
More to Read
- Guides
- Blogs
- Books
Wefunder is free for startup investors. For companies, Wefunder has 2 fee structures:
- Wefunder charges a 7.5% fee on the capital raised for Pre-seed through Series A funding.
- Any round after a Series A is charged a flat fee of $375,000– 7.5% of $5 million capital raise, the max for pre-seed through Series A funding.
Fortunately for founders, the investment platform will also match competitor pricing.
Further, creating a company profile is free on Wefunder, and your company will not pay a dime until it begins raising capital.
So Wefunder’s pricing plans are highly competitive, especially since the company holds a majority share in regulation crowdfunding.
The Wefunder app is exceptionally well laid out, offering a ton of information without cluttering your screen. The app is very functional, with little to no glitches or jumps, and every page transition is smooth.
All the industry filters, sorting options and search bars are placed at the top of the explore page and are easy to use. The main content of the explore page is sorted in trending order by default. It includes company cards containing the company name, a photo, a 1-sentence company description and two bullet points on financials or other relevant business information.
When clicking on a company, you are taken to a new page with a pitch video and investor panel at the top, details on the funding round and a note from the lead investor. The page also has a dropdown menu from which you can choose to look at the company overview, which includes highlights, a team overview, pitch deck and any downloads. Additional dropdown menu items include updates, what people have to say and a question box.
Best of all, you can invest directly from the app.
Benefits for Investors
The app offers a wide variety of industries for you to gain exposure to. Each startup has tons of information available to aid you in your investment decision-making process. Investing in private companies is one of the best ways to secure the largest gains, but it is also risky. While your investment may go to $0, you do not need to worry about fraud as you try your hand at investing in small businesses through Wefunder. Wefunder is regulated by nearly 1,000 pages of SEC and FINRA regulations, barring these new ventures from falsely taking your money. Instead, when you choose to invest, your money gets held in escrow by a 3rd-party bank and is only released to the startup once the funding round of equity crowdfunding is complete.
Benefits for Entrepreneurs & Companies
Gain access to millions of angel investors who share your vision. There are many ways to set up your funding round, and you can raise different amounts of capital at different seed rounds. If you find a better offer, Wefunder will match the fee structure.
It takes less than 15 minutes to sign up your company. But before you commit to spending money on drafting legal contracts for a capital raise, you can test the waters and see how many people would be interested in investing in your business. Then once you have done that, you can either go straight to filing SEC documents and raising money at a determined valuation or raise money through a “simple agreement for future equity” (SAFE). Raising through a SAFE lets your company skip the arduous process of determining a valuation with a professional investor and lets angel investors buy the right to future equity during a priced equity round.
If you know an entrepreneur or founder looking to raise capital, you can earn $2,500 in investment credit when they open a funding campaign.
As mentioned above, the user experience is impressive. The app is fully functional, meaning that anything you can do on the website can be done from your phone. Companies all present tons of information in a clean and fluid manner.
Wefunder vs. Competitors
Taking a look at Wefunder’s competitors.
Wefunder vs. Traditional Stocks and Brokers
Wefunder offers the ability to invest in private companies and startups. Startup investing is inherently riskier than other platforms like Robinhood, Webull or TD Ameritrade, which mostly offer large-cap stocks and funds. While it is riskier, the winners coming from the Wefunder platform tend to be much larger wins.
Wefunder vs. Other Equity Crowdfunding Platforms
Wefunder isn’t the only startup investing platform in the U.S. though. StartEngine is another leading platform. Wefunder was the first equity crowdfunding platform in the U.S., so they have a particularly impressive deal flow. They’re mostly equal in terms of size and perks. However, Wefunder does have a lot of deal flow from leading institutional markets like Y-Combinator and venture capital firms.
Wefunder was also built on the hope that the U.S. government and the EU would revise laws to grant unaccredited investors the ability to make investments in private companies with low minimum investment requirements. Now that these revisions have become a reality, Wefunder is best positioned to offer a wide variety of exciting companies looking for new capital – as shown by the company’s regulation crowdfunding market share growth from 33% in 2016 to 2020 to 41% in 2021.
Wefunder is excellent at what it does. It aims to offer individuals access to pre-IPO companies, and it has been quite successful in its mission. Wefunder has helped a diverse set of thousands of companies meet funding goals through capital from around 1 million individuals.
The app and website are easy to use and are highly functional.
Wefunder makes money by taking a small percentage-based fee from the companies raising money on the platform, which means your investment is commission-free.
Wefunder is run by a highly skilled team of professionals and is on the precipice of explosive growth, so it is safe to say the investment platform will be around for some time. Additionally, over $5 billion has been invested in startups that were initially listed on Wefunder, so it is likely that some of the companies you may find will be worthwhile startup investments.
Top Wefunder Alternatives
Investors looking for the best alternative investment options should check out these top investment platforms.
Arrived Homes is a real estate investment platform that focuses on building wealth through investing in rental properties. While most real estate platforms and REITs focus on commercial properties, Arrived Homes focuses on single-family homes as its source of rental income.
This focus on smaller properties allows Arrived Homes to sell ownership shares on individual real estate properties to non-accredited investors with buy-ins as low as $100. Learn more about Arrived Homes with Benzinga’s review.
Best For
- Small- to medium-sized investors
- Investors interested in rental income
- Investors looking to diversify
- Buy-ins as low as $100
- Open to non-accredited investors
- Offers ownership shares in real property (and all the tax benefits)
- Multiple ways to earn dividends (rental income and property appreciation)
- Great way to diversify portfolio
- Open to self-directed individual retirement accounts (IRAs)
- Long hold periods
- No secondary market to liquidate shares
-NOTICE- Benzinga has been alerted that Diversyfund has suspended its monthly dividend. This review will be updated once we investigate these changes to the platform’s dividend payments.
DiversyFund isn’t your average crowdfunding platform. You’ll find that the company puts a twist on the traditional everyday crowdfunding platform, beyond anything you can find online with a simple Google search. You only have to look under DiversyFund’s skin one layer to surmise that DiversyFund is a conscientious developer and sponsor and helps hedge risk through improved vetting.
DiversyFund offers a multifamily real estate investment trust, the DiversyFund Growth REIT, and its main goals are to increase cash flow and resale value. It’ll automatically give you access to multi-million dollar real estate assets.
Best For
- Those looking for an alternative investment beyond stocks and bonds
- Individuals who aren’t sure they want to be landlords in the traditional sense
- Investors who aren’t accredited
- Only need to pony up $500 to get started
- Open to investors all over the world
- No expensive broker fees
- You’ll only be able to access “blind pool” investments, which means that you can’t opt out of specific properties
- There’s only one real investment option, the DiversyFund Growth REIT
Groundfloor is open to non-accredited investors and private individuals looking for active real estate alternative investment. Groundfloor has great volume with more than 10 investments.
Individuals with small portfolios will also like the low $10 minimum and 0 investor fees. However, most of the loans are given to house flippers, and there is a risk of borrowers defaulting on their loans.
Best For
- Non-accredited investors: It is a good option for non-accredited investors who want to invest in an individual capacity.
- Private investors with small portfolios: Groundfloor charges a relatively small premium of $10, which private investors with small portfolios find attractive.
- Active-investors: Groundfloor is also ideal for investors who want to actively maintain and control their real estate portfolio.
- Charges the lowest minimums in the industry
- 0 investor fees
- Open to non-accredited investors
- Offers no bankruptcy protection
- High rate of an uncured default
- Many loans are for judicial-only states
Crowdstreet is an online real estate investment platform that lets investors choose from a wide range of real estate investment offerings to crowdfund. Crowdstreet investors are free to buy into managed funds, individual buildings or even build a bespoke investment portfolio that includes both kinds of deals.
CrowdStreet’s platform has a diverse range of property types, ranging from multifamily to office, industrial, self-storage and others.
Best For
- Accredited investors
- Long-term investors
- Investors looking to diversify from stocks
- User-friendly interface
- Diverse investment offerings
- Great investor resources
- Proven performance history
- Many offerings eligible for inclusion in self-directed IRA
- Accredited investors only
- Most offerings require a $25,000 minimum investment
Yieldstreet is an online investment platform that specializes in alternative investment offerings designed to generate passive income and wealth for investors. The platform offers a 1-stop shop for a range of alternative investments ranging from real estate to structured notes and even art collections.
Best For
- Accredited investors looking to diversify
- Alternative investments to stocks and bonds
- Investors looking for passive income
- Easy-to-use platform
- Carefully selected offerings
- Excellent mobile app
- Full spectrum of alternative offerings
- Options for non-accredited investors
- Majority of investments only open to accredited investors
Have you ever dreamed of owning a Basquiat painting or one of Warhol’s pop art masterpieces? You can with Masterworks — even if you don’t have $1 million in the bank.
Masterworks is an art investing platform that allows you to invest in million-dollar works of fine art. All art pieces are held in a climate-controlled, secure environment while Masterworks searches for an independent collector or buyer to sell at a profit. When a piece is sold, you’ll receive a share of the profits proportional to your initial investment.
Investors will enjoy Masterworks’ easy-to-follow system and choice of famous art investments.
Best For
- You want to diversify your portfolio with alternative, specifically art, investments
- Track record: 9 – 39% net annualized returns
- You’re interested in investing in art
- A dedicated art membership rep that will help you invest and answer questions
- Clean, attractive, easy to use platform design
- Supports Mobile App
- Requires a phone call before you can invest
- Hedge fund like fees can be confusing for new investors
- Offerings sell out quickly due to demand
Wefunder Tutorial
Frequently Asked Questions
Can you make money on Wefunder?
Yes, however, the duration of seeing a return on your investment may vary by what kind of investment you made. Wefunder allows small businesses to offer debt, convertibles, stock with no dividends and stock with dividends.
What should I know before making an investment?
Never invest more than you can afford to lose, and be sure to diversify your investments – i.e., don’t put all your eggs in one basket. If you can invest $1,000, making 10 $100 investments is safer than one $1,000 investment. Returns are binary in that your money will either go to $0 or return a crazy amount. If you are not willing to lose every dollar, do not invest in startups. If you are not willing to wait several years to see a return, do not invest as your shares in the private company are highly illiquid.
The post Wefunder Review: The Ultimate Guide for Investors by Caleb Naysmith appeared first on Benzinga. Visit Benzinga to get more great content like this.
