Wefunder Review 2024: Pros, Cons and How It Compares - NerdWallet (2024)

Billed as Kickstarter for investing, Wefunder brings private equity investment to the masses. Investors can peruse startups, dig into performance, scroll an Instagram-esque news feed for updates from startup founders, and more. But unlike Kickstarter, investors have the chance to see a return on their investment, either through repaid debt, equity, dividends or other investment structures. However, as in traditional private equity, investors should plan to invest for the long-term — at least five years, possibly even 10 or more.

The platform — as it exists today — dates to 2016, when the Securities and Exchange Commission passed its Regulation Crowdfunding law allowing eligible small, private companies to sell securities via crowdfunding. Since then, the platform has helped startups raise over $650 million purely through crowdfunding.

Wefunder says that as of 2023, it is the market leader among Regulation Crowdfunding platforms. But Wefunder aims to be about more than just returns. In the company’s words, it is inviting investors to “join the movement to fix capitalism” by letting anyone invest small amounts (over $100) in early-stage startups that may otherwise never receive funding.

Wefunder is best for:

Wefunder at a glance

Platform minimum

There is no minimum to sign up for the platform. Wefunder does not hold your investment or offer investment accounts, so there's no account minimum to maintain.

Minimum investment

$100, though individual startups can set their own investment minimums.

Fees

2% of initial investment for Regulation Crowdfunding (3.5% if using a credit card) with a minimum of $8.

Number of companies to invest in

149 (as of September 2023)

Wefunder features you should know

Payment: You can purchase investments on Wefunder by depositing money into your Wefunder Cash account, where it is stored in FDIC-insured accounts at partner banks. You can also pay by bank transfer, check, wire transfer or credit card (although it’s worth noting that the fees for credit cards, Apple Pay and Google Pay are more than twice as high as those for other payment methods).

Lead Investors: On Wefunder, Lead Investors are individuals who have vetted startups looking for funding and have made an investment based on the startup’s terms. They have an active role in helping the startup grow, offering advice, connections and mentorship.

Lead Investors earn a share of the startup’s profits, and are therefore incentivized to see it grow and prosper.

As such, investors on the platform can look to Lead Investors to see where they’re investing, how much they’re investing and why they want to invest in specific companies. This is all highly visible for companies with Lead Investors, although there’s no guarantee every company will have a Lead Investor.

Various investment structures: While Regulation Crowdfunding is what this review focuses on, Wefunder also provides access to other types of investments, mostly grouped by the limitations financial authorities like the SEC and European Commission place on investors. These distinctions are based on the fundraising structure the startup is using.

Regulation D offerings, for example, are only available to accredited investors, and have no restrictions on how much can be invested. Regulation A offerings are open to nonaccredited investors, but in many cases they can only invest up to 10% of their income or net worth per year (whichever is greater).

Regulation on European Crowdfunding Service Providers (ECSP) offerings are only available to non-US investors.

Diverse investment opportunities: One of the positives about Wefunder is the huge variety of investment options. You can search the database by category (everything from alcohol to infrastructure), whether the business is local, the type of investment you’re looking for (debt or equity) and more. The screening function also lets you filter companies by revenue, fundraising type (debt or equity), female or minority founders, how many people have already invested and similar criteria.

Referral program: Wefunder runs a referral program that pays investors between $1,000 and $10,000 if a company they invite launches a campaign on the site, depending on the quality of the referral.

Social platform: Investors have access to a feed of photos and updates from participating startups, and you can get in touch directly with all the companies vying for your dollar. This is an opportunity to learn about early-stage investing and the different types of investment structures available.

You’ll also create a profile based on personality traits, what you’re interested in and your financial information to help you understand which investments might be best for you. (It’s worth noting that Wefunder explicitly states it never endorses any of the companies on its platform.)

Investment portfolio: Every company you invest in is automatically organized in a folder in your Wefunder account, where you can see the amount invested, associated fees, status updates and any action that may be required.

Is Wefunder right for you?

Wefunder is not for the risk-averse. The website is full of disclaimers explicitly stating that investing in early-stage startups is riskier than the stock market, and there is a very real potential of losing all of your investment. Moreover, Wefunder describes the investments on its platform as more binary than the stock market, meaning stock market returns can vary over time, while startups typically either see success or failure. So if you’re new to investing, it may be best to take a more traditional approach as your first step into the market. The same is true if you need the money you plan to invest in the short-term — Wefunder suggests a timeline of seven years or more.

However, if you’ve already got a healthy investment portfolio and are looking to diversify long-term savings, Wefunder is an extremely easy platform for getting involved in private equity on a smaller scale than through traditional private equity firms.

Lastly, Wefunder could be a good option if you fully understand the risks, but still want to invest in a company you believe in, or a cause you care about. Local breweries are on Wefunder alongside scientists working on the next breakthrough in public transportation. And unlike Kickstarter, you may even see a return on your well-intentioned investment.

How do we review real estate platforms?

NerdWallet’s comprehensive review process evaluates and ranks companies that allow U.S. customers to invest in real estate, primarily through non-traded REITs or private equity. Our aim is to provide an independent assessment of providers to help arm you with information to make sound, informed judgements on which ones will best meet your needs. We adhere to strict guidelines for editorial integrity.

We collect data directly from providers through detailed questionnaires, and conduct first-hand testing and observation through provider demonstrations. The questionnaire answers, combined with demonstrations, interviews of personnel at the providers and our specialists’ hands-on research, fuel our proprietary assessment process that scores each provider’s performance across eight factors. The final output produces star ratings from poor (one star) to excellent (five stars).

For more details about the categories considered when rating brokers and our process, read our full methodology.

Wefunder Review 2024: Pros, Cons and How It Compares - NerdWallet (2024)

FAQs

Is Wefunder reputable? ›

Our Take. The bottom line: Wefunder makes it possible for the general public to invest in early-stage startups for as little as $100 by joining an investment round directed by one of the company's experienced Lead Investors. But the very nature of the investments on its platform — startups — remain inherently risky.

Do people make money on Wefunder? ›

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.

Is it safe to give SSN to Wefunder? ›

We encrypt and store Social Security Numbers (SSNs) on a separate group of servers from wefunder.com. We use an RSA key to encrypt the SSN and isolate the private key from production machines. Access to the database storing encrypted SSNs is restricted within Wefunder on a need-to-know basis.

How do you get money from Wefunder? ›

If you send a check or a wire, your money will be refunded to your Wefunder Cash account. From there, you can refund the money to your bank account (US banks only) or wire the funds to your bank (international investors only.)

What is the number 1 crowdfunding platform? ›

GoFundMe is the trusted leader in online fundraising, connecting more than 150 million people and organizations through its mission of helping people help each other. The popular crowdfunding site is available in 19 countries and counting. GoFundMe has enabled more than $30 billion of generosity with Classy since 2010.

What is the safest app to invest money? ›

Summary: Best Investing Apps
CompanyForbes Advisor RatingBest For
Betterment4.8Best Robo-advisor Investment App
TD Ameritrade's thinkorswim4.4Best Investment App for Experienced Investors
Fidelity Mobile4.3Best Investment App for Average Investors
E*TRADE from Morgan Stanley3.6Best Investment App For Beginners
1 more row

How to succeed on Wefunder? ›

Reach beyond your personal network using social media, ads, Wefunder's marketing perks, and other promotions. Aim to reach over 65% of your funding goal before moving into your Closing phase.

What percentage does Wefunder take? ›

It's free to create a company profile on Wefunder.

For Reg CF, Wefunder charges only 7.9% of the total raise if successful. For instance, if a company raises $100,000, we charge $7,900 upon close. We charge no upfront fees.

What happens when you invest in Wefunder? ›

If you invest through a WeFund, you will hold an interest in the WeFund instead of holding the company's securities directly. We will manage and sell the company's securities on your behalf, and distribute any proceeds to you upon such a sale.

Can I sell my Wefunder shares? ›

While there is no public market for your investment, you may sell your stake to another investor if they are a family member or an accredited investor during the first year of your investment. After the first year, you may sell your stake to any interested buyer. In either case, you'll need to find a buyer first.

Can an LLC invest in Wefunder? ›

If you are a Limited Liability Company (LLC) and raise equity on Wefunder, you will be charged an annual fee for tax maintenance purposes. As an LLC, you must provide K1s to your members every year.

Has anyone made money from Wefunder? ›

As of July 2022, Wefunder has helped 2000+ founders raise over $500 million. Over 500,000 people have invested on Wefunder, with a median investment of $250.

What bank does Wefunder use? ›

Your Wefunder Cash account is your online wallet with Wefunder. Our third-party banking partners, First Citizens Bank or Thread Bank, hold the money. Transferring funds to your Cash account right after making a reservation helps you to invest faster – you can apply funds from there once you confirm an investment.

Can you use a credit card on Wefunder? ›

Time to decide how you want to pay! Wefunder allows for ACH Banks (US bank accounts only), Credit Cards (limit $10,000 cumulatively, plus Wefunder fees per investment), wire transfers (investments $1000+ only), checks (investments $1000+ only), and Wefunder Cash.

Has anyone made money from crowdfunding? ›

Yes, numerous people have made money from crowdfunding. In equity crowdfunding, investors can earn money if the business they've invested in becomes profitable, while in debt crowdfunding, investors earn back their investment with interest over time.

Can crowdfunding be trusted? ›

All investments carry risks, and crowdfunding, no matter how well-intentioned, is unfortunately no different. Some of the risks include: Fraudulent campaigns: when the company misleads investors and misuses the money.

How safe is real estate crowdfunding? ›

Risks: While real estate crowdfunding can offer higher returns than traditional investments, it also has risks. These could include project failures, illiquidity, and the potential for platform failure or fraud. 3.

How do I know if an investment site is legit? ›

HOW TO AVOID INVESTMENT SCAMS. Use www.BrokerCheck.finra.org to check if a broker is a licensed or if someone has complained about them. Read about and understand any investment before you give someone your money. Ask for information in writing.

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