Reg CF 101 for Founders
At Wefunder, we believe that anyone should be able to invest in startups they love, and that founders should be able to raise money from their customers, community, and biggest fans. Through equity crowdfunding, you can raise $50k-$5M from accredited and non-accredited investors alike, all rolled up into just one line on your cap table, entirely on your own terms. In this quick intro, we’ll cover all the essentials you as a founder need to know when considering an equity crowdfunding raise.
Who can invest?
Through Wefunder, anyone can invest as little as $100 in your company. You can also advertise your fundraise to your network, customer list, in the press, or on social media (abiding by these rules). For most companies, Reg CF is the best way to maximize the amount you can raise, while giving customers and friends the opportunity to support you. It’s also a fantastic marketing campaign, and a great way to lock down life-long superfans.
Am I a good fit?
Do you have a community of fans and friends who love what you’re building? Do you want to let your community, friends, family, and die-hard fans partake in your dreams and successes? Then you’re a perfect fit!
So long as your company is private and incorporated in the US, you can raise on Wefunder. We help companies from all industries and stages. From healthcare benefits, to cancer therapies, to hair care, to education technology, and beyond: we’ve seen it all!
We most commonly see companies around the seed stage, but now that you can raise up to $5M we’ve been helping companies allocate portions of their Series A or B rounds to their fans on Wefunder. You can raise on a SAFE, convertible note, priced round, or revenue share. We don’t support offerings of common stock.
How and when can I start?
You can put together a page, launch it, and start spreading the word in just minutes, at no cost! Supporters can begin reserving spots in your round immediately. These reservations are non-binding – no money is sent to you yet. In the industry, we call this phase “testing the waters”. This is a great opportunity for you to test out whether this mode of fundraising is a good fit, or just dive right in, without having to worry about any legal work or bureaucracy upfront.
At Wefunder, we ask you to start working on the legal paperwork when your raise is getting close to our minimum of $50k. In order to raise through equity crowdfunding, you need to submit a “Form C” with the SEC, which just requires that you provide us with some standard disclosure and financials. Don’t worry: we’ll file them all on your behalf, and you’ll work closely with an account manager to put that all together.
Once we help you finish your legal work, investors will be prompted to confirm their investments, and then cash starts flowing through your page.
What will this look like on my cap table?
First of all, you have complete control over your terms and valuation. We provide template contracts for SAFEs, convertible notes, priced rounds, and even debt/revenue share options.
Your entire raise will be consolidated into one Special Purpose Vehicle (SPV) – or two SPVs, if you offer different Early Bird terms. The best part of all this is that an SPV is just one line on your cap table. This makes later rounds of raising a breeze (angel groups use this structure all the time!), while giving investors the same economic exposure and info as if they had invested directly in the company. An SPV, just one line, keeps your cap table super clean, which is something VCs love to see, and it makes any conversions or liquidation events easier for everyone. A real win-win.
The final component of this great structure is finding a lead investor. That’s an accredited investor putting at least $1000 into your Wefunder campaign (but ideally more, since it’s a great signal to other investors). The best leads are strategic partners who can advise you, someone who you’re excited to work with, and ideally someone well-known or trusted in the industry. The only limitation is that there can’t be a “conflict of interest” for the lead, which just means they can’t be a family member, employee, etc. Your lead will vote on behalf of all your Wefunder investors, which means you’ll never have to rally 100s of people for legal signatures. Easy, simple, clean.
I love how this sounds! Where do I go to start?
Awesome! You can learn more about launching a raise at wefunder.com/raise right now.
Questions? Ask the folks at Storied to connect you to someone on our team, who will help guide you through the process and address any concerns you may have.