Wefunder Match Fund, Investments From the Crowd

This is a guest post written by Jonny Price, Director of Fundraising at Wefunder. Wefunder is a partner of Render Capital 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, that allows anyone, not just accredited investors, to invest in startups and small businesses they love. Founded in 2011, Wefunder has enabled over a hundred thousand investors to fund hundreds of startups with $200M of capital. Wefunder uses the Regulation Crowdfunding exemption, made legal by the 2012 JOBS Act, to allow startups to raise up to $1.07M per year, a number that is about to increase to $5M per year as updated SEC regulations go live.

Why Regulation Crowdfunding Helps Founders

Raising capital through Regulation Crowdfunding can make it easier for founders to fundraise in three primary ways. First, they are able to publicly promote the investment opportunity, rather than being restricted to private solicitation. Second, they can raise from anyone, unaccredited as well as accredited investors, rather than just millionaires and billionaires. Third, they can get in front of Wefunder’s investor base, which typically accounts for a significant share of the capital raised on the platform.

Many founders also see significant benefits in recruiting an army of loyal customers, brand ambassadors, and champions. Wefunder investors have helped founders land large customer contracts, bring in follow-on financing, and hire team members. Some founders like the idea of their community members and early customers benefiting from the wealth they will work hard to create.

The Louisville Match Fund

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 make it easier for Louisville founders to raise the capital they needed to launch or grow their startups. Four startups in Louisville successfully raised capital and were matched by the Render Capital fund: Cornbread Hemp, Unitonomy, Pav*r, and Stay Clean.

As the flywheel starts to spin (more success stories, more favorable press coverage) the amount of capital flowing to Louisville founders, and especially underrepresented founders, will continue to grow. There are strong network effects in investment crowdfunding. As more local people become micro-angel investors in startups they love, there will be more potential investors locally for the next company to pitch. Most cities throughout the United States have a very small cadre of angel investors looking to invest in early-stage founders, and Wefunder’s model has the potential to help fix that. Over time, as these companies start to return funds to investors, any wealth created stays in the Louisville community rather than flowing out to Wall Street and Silicon Valley.

When I led the US team at Kiva.org, the team behind Render Capital was 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. Other cities and regions are now looking to replicate the model. From Louisville to the world.