How to raise $1 million on Wefunder
There’s a wide range of founders on Wefunder — from restaurants to rocketships, and from friends and family rounds to Series Cs. And so prescriptions for “how to run a successful Wefunder round” need to be taken with a healthy shovelful of salt. If you’re Mercury Bank, the answer is “Send an email. Then sit back and watch $5M flood in over the next few hours”. But most founders have to hustle a little harder. This blog is aimed at the “average” Wefunder founder — you’ve made some good progress on your startup, and you’re targeting raising $1M from angels. You have a few relationships with investors who you think will write you a few checks. And you’re raising the full $1M on Wefunder (as opposed to raising from VCs off the platform, and then your community on Wefunder).
In summary, here’s my recipe:
- (1) Make a plan
- (2) Create your Wefunder profile
- (3) Push the big, red button to go live
- (4) Get feedback (and hopefully investments) from 10 people close to you
- (5) Line up your lead investor and set the terms of the offering
- (6) Reach out to 300 people you are confident will invest
- (7) Pitch 50 angel investors
- (8) When you’ve raised one third of your target amount, “go public”
- (9) Record a long-form interview with your lead investor
- (10) Full court press — social, email, press
- (11) Leverage your existing investors
- (12) Regular, bi-weekly cadence of “wow” updates
- (13) Get creative
- (14) *Maybe* run ads
- (15) Hustle hard in the week leading up to the close of the round
(Side note — my colleague Katie Powers and I recently interviewed our true OG Justin Renfro about this topic of fundraising strategy. It was an incredibly rich, 80-minute-long conversation that’s well worth listening to if you’re considering — or currently! — raising capital on Wefunder).
An average timeline for your Wefunder round might be one month in private, and then two months in public. If you need more time, you can take it. If you can get it done more quickly, and get back to running the business, even better.
And a reminder that this recipe is for an “average” Wefunder raise. But you, dear startup founder reader, are not average. You are a unique and special (dare I say magical) snowflake. And so your “ideal approach” to raising your round on Wefunder will also be bespoke to you. If you have a huge social audience, your path to victory will look different to an early stage biotech founder. If you have a CPG product with a customer Lifetime Value (LTV) of $1,000, it might make more sense for you to spend money on advertising your Wefunder round — because if these ads recruit investors who also become customers, you’re killing two birds with one stone.
In every case, our Wefunder team are here to help you. We’ve now helped over 1,000 founders raise capital on our platform, and we are highly motivated for you to succeed. Every one of us is passionate about helping more founders reach their goals — so make sure to use us!
But with that being said, now for a little more detail and context on each of these 15 points.
(1) Make a plan
I think it’s an army expression that goes “Perfect Planning Prevents Piss Poor Performance”? So…umm…yeah you should make a plan. Write it down. With target dates, and owners (i.e. definitely get help from other people if you can). 2–3 pages of a Word doc as a starting point. Craft it together with the Wefunder team — we’ve made a fair few of them by now! Get input from smart people. One hour. Easy.
(2) Create your Wefunder profile
Wefunder has made some beautiful software to make this as quick and easy as possible for you. Click a button to upload your pitch deck. Beautiful, emotive photos. A clear and concise tagline — the fewer words, the better. Dynamite highlights. Put your best foot forward. “I didn’t have time to write you a short letter, so I wrote you a long one instead” (i.e. less is often more). Video — we recommend the founder talking into the camera for a few minutes. Also easy.
(3) Push the big, red button to go live
The easiest part of all. Once you have a “pitch deck” you’re happy with, you click the button to “go live” on Wefunder — this allows people to start reserving investments. Not just rich people (“accredited investors”), but anyone. Yay! *Now just sit back and watch the $1M roll in!!!* Ahem. OK probably not. See points (4) through (15) below.
Note — when you “go live” on Wefunder, you’re initially in “private mode”. People can only find you with the direct URL of your Wefunder page — you don’t show up in the public list of Wefunder startups that are fundraising. You haven’t “filed a Form C with the SEC” yet — instead, you’re in what’s called “testing the waters” mode. Your amount raised is not visible to people viewing your page — it looks something like this:
But as someone famous once said, a journey of a thousand miles begins with a single step. And you just took it.
(4) Get feedback (and hopefully investments) from 10 people close to you
This isn’t rocket science. Before you push your fundraise out more broadly, make sure to get a number of smart people’s eyes on it. Ask them for feedback on how to improve it — what do they like? What’s unclear? What else would they want to see? And as another famous person said, “ask people for money and they give you feedback. Ask them for feedback and they give you money”. So hopefully you get your first few checks at this point as well!
Speaking of which, you might want to explicitly get your first few checks here. If it was me, here’s who my first five investments would come from:
- (1) My wife
- (2) My mum
- (3) My dad
- (4) My sister
- (5) My best friend
Pro tip — watch them go through the flow. Ideally in person, or maybe on a Zoom call. Where are they hesitant? Can you improve the communication there? Try to get into the mindset of an investor looking at your Wefunder page. It also helps if you are intimately familiar with the Wefunder flow (account creation, checkout, etc.).
(5) Line up your lead investor and set the terms of the offering
One of the best “product features” of Wefunder is the Lead Investor. This is as awesome an investor as you can persuade to invest in you — who invests a decent amount (e.g. 5% of the round). At Wefunder, we roll individual investors up to one Special Purpose Vehicle (SPV) on your cap table. And the Lead Investor casts the vote for all the individual investors in the SPV. So it should be someone you deeply trust. There is some potential economic upside for Lead Investors, which can help you to close them.
If you can get Elon Musk or Sheryl Sandberg to be your Lead Investor, your Wefunder round will go very smoothly. So far, no Wefunder founders have been able to land one of these two… But Iggy Pop has been a lead investor. And so has Bill Nye the Science Guy. The ideal Lead Investor is:
- a) Someone you trust
- b) Writing a large check (the amount of the investment is a signal)
- c) Highly credible
- d) Famous (or at least they have a big audience)
- e) Willing to help you (e.g. share on social, bring other people behind them, etc.)
One of the most important roles of the Lead Investor is to negotiate the terms of the deal with you — e.g. are you raising on a SAFE, a Convertible Note, a Priced Round, a Revenue Share, etc. Should your valuation cap be $5M or $6M; should your Revenue Share multiple be 2.0X or 2.5X, etc. The idea here is for other potential investors to see your Lead Investor and say “oh Reid Hoffman is investing on those terms? Sure — I’m in!”
Note — you don’t need to have your Lead Investor lined up (or even your investment terms set) at this stage of the process. But it helps.
Goes without saying, but your terms should be in line with market. E.g. If your valuation is too high, you’ll raise less money.
Consider offering perks as well. You don’t need to, but they can help. We generally recommend avoiding logistical complexity (e.g. sending out a bunch of t-shirts). Discounts are cool — e.g. if you’re a consumer-facing company, give a 10% discount to investors. Not only will this increase their conversion to invest, but it will hopefully increase your revenue and profit in the months and years following. Imagine a restaurant raising debt capital on Wefunder — that offers a free glass of wine (normal price is $10) to investors every time they come into the restaurant. The investor invests $100, and then goes to the restaurant once a month for a year. They get a $120 of free wine, even before they get any loan repayments from the restaurant, so they’re delighted. But each of those 12 visits, they spend $100 on food at full price. And the glass of wine normally costs customers $10, but it only costs the restaurant $3. You get the idea. “Aligned” perks are really cool as well. Free tasting tour for investors in a distillery, early access to beta product launches for tech companies, investors’ names on the jersey for a soccer club, etc.
(6) Reach out to 300 people you are confident will invest
I use an analogy of “concentric circles” when it comes to fundraising on Wefunder. Start with the people closest to you (“inner concentric circle”), and then expand to more and more people, you are less close to (“outer concentric circles”).
But initially, you want to pitch people you know, who trust you. We built this simple spreadsheet to help track your outreach here. It’s sometimes helpful to see fundraising as a sales pipeline — just as you use a CRM to track conversion of customers through your sales funnel, same with a Wefunder community round.
Put 300 names on this list. They should be (a) people you have high (e.g. 25%+?) confidence will invest in you, and (b) people who have at least some money. I am a geek, so if it were me I would assign a target investment amount for each person, and an estimated probability that they invest. Combining those two numbers gives you an expected amount raised — which is a helpful number to have at this stage.
Reach out to these target investors — in a thoughtful, personalized way — by email, text message, phone, in-person, etc. Track how many people you’ve reached out to, how and when. And track response rates. And especially whether they invested, and how much. Follow up with people you expected to invest, but didn’t. Why didn’t they? Maybe they have some great feedback on how you can improve your Wefunder page, or how you’re communicating the investment opportunity, etc.
This is a laborious part of the process. But for most founders, it’s critical, high ROI, and lays the foundation for success.
(7) Pitch 50 angel investors
You shouldn’t see raising money from your community on Wefunder as an alternative to raising money from angel investors. But rather, an addition / complement to it. 50% of investment volume on Wefunder comes from accredited investors, writing larger checks.
So get out there and pitch. Hopefully you have existing relationships with some angels. If not, go out and get them — through warm intros, or cold outreach to groups or individual angels. Pitching is hard, sometimes even soul-destroying. But the reps help you improve. And some larger checks enhance the “social proof” of your round, and represent much bigger strides towards your goal.
(8) When you’ve raised one third of your target amount, “go public”
This isn’t a hard rule, but I think best practice is to stay in private mode until you’ve raised at least one third of your round.
Founders often want to go public as soon as possible — so they can get a bump from Wefunder’s 1.4 million investors. But you only get one chance to make a first impression. If our investors first see you when you’ve raised $52K from 33 investors, that’s a significantly worse impression than if you’ve raised $382K from 217 investors.
And the same goes for your “outer concentric circles” as well. You want to hold the “social media blast” and “email blast” and “press release” until you publicly launch — and at this one moment in time, the more traction you have on your round, the better.
(9) Record a long-form interview with your lead investor
Your Wefunder pitch website has a lot of great info — pitch deck, highlights, photos, short video, Q&A, investor notes, press coverage, financial and legal info, etc. etc.
But for investors who want to really dive deeper, a great piece of content to record is a long-form video interview featuring you, the founder. With hard questions being asked by an expert in your sector — e.g. your lead investor.
Oftentimes with content marketing, it’s better to have one amazing piece of content with 10,000 views, than 10 mediocre pieces of content with 1,000 views. And that’s especially true here.
Once you have this interview, polish it until you’re super happy with it. Then promote it as far and wide as possible.
(10) Full court press — social, email, press
A lot of the points so far are Planning, Preparation, and Private. Now it’s time for a fourth P: Public.
When you pull the trigger to go public, blitz it. Full court press. Email blast, social media. Email all the journalists, speak on all the podcasts. Can the accelerator you went through share on their social? Can your VCs promote you? Can your alma mater include you in their alumni newsletter? What email lists or communities are you a part of?
Put your Wefunder community round in your email signature, a banner on your website, huge window decal with a QR code in the window of your bar, host in-person events, apply to pitch events. In the week of your public launch, don’t leave anything out on the field.
Go broad here — mass marketing, the more eyeballs the better. But also be targeted. In order for someone to invest $100 or more in your startup, they’re going to have to get excited. Who are the communities and audiences that are going to be most stoked about your company, or your mission? As Tyler Hayes put it on our podcast, who “shares your crazy”?
(11) …Leverage your existing investors
One of the coolest things about running a community round is that, by doing so, you recruit an army of champions. These people are now financially incentivized for your company to succeed. That’s powerful. And when you’re trying to raise capital, probably the best way they can help you succeed is to help you raise capital.
So you should ask them to.
Consider two buckets here. Firstly, a core group of (e.g.) 25 people who are your super close BFFs. These are people who are going to go out of their way to help you. Get their feedback on your Wefunder pitch website at the start of the campaign. Get them to personally email 20 people each. Get them to retweet every time you post about the raise. Etc. etc. In his Adventure Capital podcast interview, Renji Bijoy (CEO of Immersed, who raised $9M on Wefunder) talks about this strategy in more detail. I think it’s a brilliant idea.
Secondly, all of your Wefunder investors. Let’s say you’ve raised money from 231 investors at the moment you “go public”. How many of those 231 people can you get to retweet your launch announcement on launch day? How many can you get to share the hour-long video interview you did with your lead investor on their LinkedIn?
Be reciprocal here. If you’re only asking your investors to do stuff for you, they might get burned out. Bring them in to your community, and what you’re building. Open the kimono. The more you engage them, the more they’ll help you.
(12) Regular, bi-weekly cadence of “wow” updates
Wefunder has an easy update tool that allows you to email all of your investors (and followers — people who have expressed an interest in your raise, but haven’t invested yet).
Post a fire update every couple of weeks. You want people that read it to say “wow! This seems like a no brainer!”
Raise updates are OK (“we just passed $250K!”), but awesome business updates are more powerful (“we just grew by 32% MoM”, or “we just closed Whole Foods as a customer”).
Can you get your investors to share these updates to get the word out?
(13) Get creative
With Wefunder community rounds, you often see a spike at the start of the campaign, a spike at the end of the campaign, and a lull in the middle. In that lull, it can help to get creative with experiments, marketing tactics and growth hacks.
Wefunder’s fundraising playbook is packed with ideas. Talk with friends in marketing. And talk with the Wefunder team.
(14) *Maybe* run ads
We’re generally not huge fans of raising capital through running paid ads. You’re already paying a 7.5% fee to Wefunder on investments you raise. So if you pay $0.10 for dollars raised through advertising, those dollars can become a very expensive way to raise capital.
But that being said, there are three ways that we’ve seen ads work:
Firstly, and most obviously — if you can recruit your investors as customers, then these ads can generate revenue for your company, as well as investments. For example, if a whiskey distillery spends $10,000 in Facebook ads, that drive $100,000 in investment volume from 100 people… If those people go on to buy 2.5 bottles of whiskey on average, at $80 per bottle, that’s $20,000 in revenue from the $10,000 ad spend, as well as $100,000 in investment volume.
Secondly, we have seen retargeting to be very effective — i.e. if someone visits your Wefunder pitch website but doesn’t invest, subsequently showing them ads has historically had a very high Return On Ad Spend (ROAS).
Thirdly, there are some companies that just have very high ROAS — which can sometimes make the economics work, especially around the close of the Wefunder round, when the countdown clock with seconds ticking down drives urgency.
(15) Hustle hard in the week leading up to the close of the round
Speaking of which, the last few days of your round are crucial. Deadlines always drive action. And there will be many investors who have been sitting on the fence until this point, who you should now try hard to convert. If you’ve been tracking your investor funnel (e.g. using a CRM), you’ll be better-placed to do this.
It’s also an opportunity to get your existing Wefunder investors to increase the amount they’re investing — especially if you’ve made some great progress on the business in the weeks since they wrote their initial check.
But as well as converting investors “already in your funnel”, this is a good chance to do one last public / marketing push as well.
We’ve seen founders that have been fundraising for months, and then raised more than half of their round in the last few days of their campaign.
This was a long blog post. If you’re running or launching (or considering launching) a community round, hopefully it was helpful for you.
I firmly believe Wefunder makes it easier for founders to raise capital. Because you can publicly promote the round; you can raise from unaccredited investors as well as accredited investors; and you can get in front of a million Wefunder investors. And if you have a huge audience that loves you (like Mercury, Levels, Roam or Wefunder ourselves!), then it’s literally “push button get money”. But for most founders, raising $1 million in capital on Wefunder — like raising $1 million in capital anywhere — will be hard. It should be hard.
It goes without saying, but all of us on the Wefunder team have a lot of experience and expertise with community rounds fundraising strategy. And we’re passionate about helping founders succeed.
So if you want to learn more, or talk about any of this in more detail, don’t hesitate to reach out to us.
Hustle hard! And good luck!