MOUNTAIN VIEW, CALIF.- The journey down Sand Hill Road is not an easy one. WeFunder strives to turn that uneven, obstacle-ridden trip into a one-stop shop for capital.
WeFunder is a online investment platform. The ultimate vision is that anyone, regardless of wealth, can invest in startups. The platform is currently only available to accredited investors, until the SEC publishes the final regulations for the JOBS Act which changes the rules for crowdfunding.
“We are not just giving startups dumb, quick, and easy money,” said founder Nick Tommarello on stage at Y Combinator’s demo day. “With the power of the crowd, we are giving them an army of evangelists that feel a sense of ownership and are driven to help their startup succeed.
WeFunder finds and features promising startups on the site to a community of almost 14,000 investors. Those people have the opportunity to put as little as $1000 into companies that catch their eye. All of the money raised on WeFunder is put into a trust account managed by the startup’s law firm and then transferred into their corporate account once the campaign is completed.
This strategy opens up investment opportunities to a larger community and gives startups more flexible fundraising options. Tommarello said this is like pressing a “green button” to raise money, instead of going through the traditional, labor-intensive channels. Some voices in the Valley say crowd funding for startups is a bad idea because it can lead to a cluttered cap table and prevent fundraising opportunities down the road. However, Tommarello said that a large number of small investors can be a strength.
WeFunder is comparable to The Funders Club, which launched as part of the last Y Combinator class and has since raised $6 million and attracted international attention from the media, investors, and entrepreneurs. The JOBS Act may not be in action yet, but when it is, it will democratize the early-stage investment process for startups and investors.