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Wefunder calendar    Feb 23, 2021

Wefunder Match Fund – Investments From The Crowd

Learn how Wefunder and Render Capital's matching fund is making it easier for early-stage entrepreneurs in Louisville to raise capital and launch their startups. Discover the benefits of Regulation Crowdfunding and how it's empowering founders and investors alike.

This is a guest post written by Jonny Price, Director of Fundraising at Wefunder. Wefunder is a partner of Render Capital’s that allows anyone to invest as little as $100 in the startups they care about.

In 2020, Render Capital partnered with Wefunder to roll out a “matching fund” for early-stage entrepreneurs in and around Louisville. Founders that raised $20K through “Regulation Crowdfunding” on the Wefunder platform received a $20K match from Render Capital. As far as we know, this is the first fund of its kind, anywhere in the United States.

Wefunder is a Public Benefit Corporation and B Corp, based in San Francisco, which allows anyone – not just accredited investors – to invest in startups and small businesses they love. Founded in 2011, Wefunder has now enabled over a hundred thousand investors to fund hundreds of startups with $200M of capital, and those numbers are growing quickly. Wefunder uses the Regulation Crowdfunding exemption, made legal by the 2012 JOBS Act, to allow startups to raise up to $1.07M per year – although that number is about to increase to $5M per year when updated SEC regulations go live (probably in March of this year).

Raising capital through Regulation Crowdfunding can make it easier for founders to fundraise in three primary ways: Firstly, they are able to publicly promote the investment opportunity, rather than being restricted to private solicitation; secondly, they can raise from anyone (unaccredited as well as accredited investors), rather than just millionaires and billionaires; and thirdly, they can get in front of Wefunder’s investor base of 850,000 people, who typically account for one-third of the capital raised on the platform. Furthermore, many founders see significant benefits in recruiting an army of loyal customers, brand ambassadors, and champions. Wefunder investors have helped Wefunder founders land large customer contracts, bring in significant follow-on financing, and hire team members. Some founders also like the idea of their community members and early customers benefiting from the wealth they will work hard to create, rather than (or as well as) some rich people. 

The Render Capital matching fund for startups located in Louisville or Southern Indiana was rolled out in 2020. In the middle of a pandemic and its corresponding economic uncertainty, the fund was intended to help make it easier for Louisville founders to raise the capital they needed to launch or grow their startups. Four startups in Louisville have now successfully raised capital, and been matched by the Render Capital fund: Cornbread Hemp (raised $393K), Unitonomy (have raised $134K to-date), Pav*r (have raised $84K to-date), and Stay Clean (have raised $54K to-date). 

And now several more Louisville startups are going through the Wefunder review process. As the flywheel starts to spin, more success stories emerge, and favorable press coverage is garnered, the amount of capital flowing to Louisville founders–and especially under-represented founders – will continue to grow. And there are strong network effects in investment crowdfunding, which will compound this growth. As more local people become microangel investors in startups and small businesses they love, when other local companies launch on Wefunder, there will be more potential investors locally for them to pitch, and raise capital from. Most cities throughout the United States have a very small cadre of angel investors looking to invest in early-stage founders. Wefunder’s model has the potential to help fix that problem. Over time, as these companies start to return funds to investors (ordinary, middle-class Louisvillians, as well as millionaires), any wealth created will stay in the Louisville community, rather than flowing out to Wall Street and Silicon Valley, and the virtuous cycle continues.

When I led the U.S. team at Kiva.org, the team behind Render Capital were one of the first organizations in the country to collaborate in launching a “Kiva City” in Louisville, in 2014. Since then, dozens of other cities have followed suit, resulting in thousands of entrepreneurs expanding their access to capital. With the Render Capital matching fund, the team is again pioneering an approach to get more capital flowing to founders in and around Louisville, and stimulate entrepreneurial adventure in the region. Other cities and regions are now looking to replicate the model. From Louisville to the world!

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