SeedInvest and WeFunder both stand out in the equity crowdfunding space. They both allow non-accredited investors to reap the rewards of investing in startup companies.
Personally, I think it’s too early to determine a leader in the equity crowdfunding space, but I wanted to take a second to evaluate some of the similarities and differences between these two major platforms.
If you have used either of these websites, leave a comment down below sharing your experience!
SeedInvest
Having launched in 2013, SeedInvest has seen a number of successful crowdfunding raises on its platform, including KnightScope, which topped off its Series A round and raised $1.5 million in funds in 2014, Virtuix, which raised $7.9 million from 1832 investors, and Vengo, which raised $720,000 of its $2 million in funding.
At the time of writing the platform says that it has helped 70+ get funding to the tune of $50 million via 136,989 investors. The platform itself has raised its own Series A round for $4.15 million on their website.
The platform lets you invest in both Regulation A+ offerings and Crowdfunding offerings. Entrepreneurs can also do a test the waters period to gauge the public’s interest in their offering.
For those entrepreneurs raising under Regulation D, the “SeedInvest Selections Fund is currently investing $200,000 alongside each company that successfully raises capital on SeedInvest1 under Regulation D.” They are aiming to invest in 50 companies in the next 2 years.
Fundraising duration: 60 days minimum
Costs: “5% – 7.5% placement fee; charged on the total amount raised on SeedInvest in the round, paid only upon the successful completion of your offering.
5% warrant coverage or equity; based on the total amount raised on SeedInvest in the round.
Up to $0 – $4,000 in due diligence, escrow, marketing and legal expense reimbursements.”
If you’d like to raise between $100,000 and $50,000,000 on SeedInvest, you’ll need a minimum viable product, traction, a US incorporated business, and at least two full-time teammates.
You can learn more about other rules here.
Lastly, SeedInvest has an auto-invest feature, where you can invest in 25 stage startups through their automated investing capability. You’ll be notified of new startups that launch on the platform and have access to lower invest minimums.
WeFunder
WeFunder was launched in 2012 and has also seen early success. They helped LEGION M raise $1 million under Regulation CF, Beta Bionics and Hops and Grain also raised $1 million under Regulation CF. One notable success is that of Zenefits, which now has a $2 billion valuation. They raised $50,000 from 13 investors in 2013.
In total, they’ve attracted 74,803 investors who funded 131 startups with over $24 million through regulation D and crowdfunding. They also raised $4 million of their own from 250 investors, in amounts ranging from $100 to $250,000.
Along with browsing investments and participating for as low as $100, you can also become a part of an investment club and follow lead investors with domain experience into various deals.
Costs: “We charge 4%, only if your fundraise is successful.” “We charge a $195 fee when you want to enable fundraising.” They also provide investment contract templates and help you draft Form C.
At the time of writing, for companies with an “independent and sophisticated lead investor (investing at least $25,000 on the same terms), we’ll advance up to $10,000 to cover legal, accounting, and profile creation expenses.”
If you’d like to raise between $20,000 to $5 million with WeFunder, you’ll need to have credibility, meaning the endorsement of an investment club or an experienced investor who has agreed to your terms. You’ll also need a prototype and traction.
Finally, WeFunder has the scout program where you can earn money by referring companies to their platform. If they successfully raise funds, you’ll get a cut. You will have to do some hand-holding with these companies though. You have to sign them up and make sure they go through the entire process.
Conclusion
Thus far, I think that both platforms are doing a pretty good job with their educational materials and support. I like the auto-invest feature that SeedInvest has, and definitely respect their success thus far.
It does appear that it’s less expensive to raise money on WeFunder at the time of writing. Also, they have the investment club feature which could make it less risky to enter the world of startup investing. However, their community is smaller.
I’d look into both platforms, along with AngelList if you’re interested in equity crowdfunding and raising money from the crowd. I’ll be curious to see how these websites develop over time.
