We believe that when all Americans can invest in innovation, the world will be a better place. And soon, our dream will become a reality. Thanks to the JOBS Act, everyone — not just the wealthy — will be able to invest as little as $100 in the startups they care about. Not only does this open up the pool of investors, and increase the amount of great ideas that get funded, but it allows startups to grow an army of passionate investors who truly want to see them succeed. Second tier VC’s will become obsolete as startups tap their lead users and customers for quick early investments.
The Birth of Wefunder
We built Wefunder for ourselves. The three of us — Nick, Mike, and Greg — wanted to invest in the companies that our friends were founding, and we wanted those friends to invest in our companies, as well. But until 2012, laws written in the 1930's prevented us from doing so.
You don't feel a sense of meaning when you buy a share of IBM — it's purely a financial transaction. But startups? For us, the opportunity to support entrepreneurs trying to change the world, and still have a chance of earning a return...well, that's value beyond money. We could give back.
In January of 2012, we built a prototype of Wefunder. The only problem: it was illegal. The legislation that would legalize crowdfunding was stalled in the Senate, and needed some serious changes for it to work in practice.
So Mike and Nick - along with our friends Nick Plante and Dan Sullivan - launched a petition to Congress that, within 2 days, earned $5M in pledges and was mentioned on the Senate floor. That got us some attention. A week later, the entire team was invited to Washington DC to meet with the staffs of two Senators, a Congressman, and the President's Office. Amazingly, with no inside connections, we had become the public voice in DC for democratizing startup investing.
For the next few months, we embraced our role as lobbyists. We helped with the speeches of one Senator and wrote part of the official legislative "letter of intent" provided to the SEC to guide their rulemaking. On April 5th, President Obama signed the JOBS Act into law, legalizing equity crowdfunding. Mike was invited to attend the signing ceremony at the White House, while the rest of the team celebrated while working in Thailand.
That Was the Easy Part
Once the legislation passed, we got back to work. We built out the product, became registered investment advisors, and worked through a host of legal issues to make crowd investing practical for the highest quality startups.
In January 2013, we joined the Winter batch of Y Combinator, the most prestigious startup accelerator program in the world. At the end of the program, on 'Demo Day,'' we opened up our platform’s 15,000-member investor community to fund our classmates’ startups. We've since done approximately $2M in transactions on Wefunder.
Waiting for the SEC
Believe it or not, despite the JOBS Act being passed in April of 2012, the SEC still has not done the necessary rulemaking. This is about to change. On September 23rd, 2013, Title II of the JOBS Act goes into effect. For the first time in 80 years, startups will be able to advertise their fundraising. This is a big deal for us - it makes "accredited crowdfunding" finally practical. That's when the fun begins.
The SEC won't implement Title III of the JOBS Act - allowing anyone to invest, regardless of income - until the summer of 2014 at the earliest. We can't wait for the day!