Wefunder, best known for its focus on issuers leveraging the Reg CF securities exemption, is also offering venture capital funds for Accredited Investors.
While Wefunder is still one of the dominant players in the Reg CF space, like many other securities crowdfunding platforms, the company also targets more sophisticated investors by offering access to venture funds – securities issued under Reg D.
As an Accredited Investor, you must have a net worth of over $1 million (not counting your primary residence) or earn over $200,000 a year. This exclusionary rule has been in the books since the 1980s, and the theory is that wealthier individuals can take the hit if an investment does not work out. Early-stage investing is not for the risk-averse as many firms fail, but this sector of private markets can also generate outsized returns.
Wefunder reports that their VC funds have historically performed better than the top 25% of all VC firms. According to its website, the VC funds have booked 18 exits, 12 unicorns, and an average IRR of 29%. The minimum investment is just $5000.00 – far lower than many venture funds. Typically, if you participate in a Wefunder VC Fund, you are investing alongside well-known investors.
In total, WeFunder reports that over $852 million has been raised for 3581 founders since its inception. Wefunder has also raised money for itself on the platform, with its most recent round ending last October.
Wefunder states it will be profitable and cash flow positive during 2024, having reported a $1.7 million profit in Q2 of 2024. Adding additional paths to serve diverse investors, such as VC funds, is probably helping the company generate profits.
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