What is equity crowdfunding and how is it different from traditional crowdfunding?
Crowdfunding is the practice of funding a project or venture by raising many small amounts of money from a large number of people via the Internet. There are essentially two types of crowdfunding platforms. The first type of crowdfunding platform offers products or rewards in exchange for your funding commitment. The second type, which is one that Wunderfund.co runs, allows individuals to invest in a startup company in exchange for a percentage share (or equity) in that company. This fundraising method was legalized by the JOBS Act in 2012 and it's subsequent revision with Title III in 2015.
How does the Wunderfund Platform work?
Once a startup company launches a fundraising campaign, investors are given an opportunity to back the startup with an investment commitment. Ultimately, the crowd decides whether the campaign will reach their target goal. If that target goal is not met by the campaign deadline (usually 90-120 days), then the project goes unfunded, and your commitment is released.
How is equity crowdfunding different from typical venture financing?
In short, we see equity crowdfunding as a step in deregulating the venture capital industry. Prior to May 2016, only wealthy accredited investors (i.e. individuals who earned >$200K a year or whose net worth was >$1M) were allowed to invest in startups. Even the early equity crowdfunding sites were only dedicated to serving wealthy indviduals. But with the recent change of Title III of the Jobs Act, now everyday investors like you can invest in a startup using equity crowdfunding sites like Wunderfund.co.
How much money do I need to start investing?
You can invest as little as $100 in a startup company, up to a limit set by the SEC's Regulation Crowdfunding rules. Wunderfund.co calculates your limit from the income and net worth you provide. The limit applies to all of your Regulation Crowdfunding investments in any 12-month period. Accredited investors have no limit.
| Your situation | Your 12-month limit |
|---|---|
| Either your annual income or your net worth is under $124,000 | The greater of $2,500 or 5% of the greater of your annual income or net worth |
| Both your annual income and your net worth are $124,000 or more | 10% of the greater of your annual income or net worth, up to a maximum of $124,000 |
You can see how much you are allowed to invest in your investor profile page. See the FAQs for Investors for examples and more detail.
Why did you create the Wunderfund Platform?
People in Cincinnati are excited about the fast growing entrepreneurial ecosystem in their backyard. It's transforming neighborhoods, creating jobs, and revitalizing the economy. In fact, the Cincinnati region is considered the fastest growing midwest economy, and includes incubators, accelerators, and universities creating thousands of new startups. The problem is that many of these new startups are looking for capital, but it's getting increasingly harder to raise capital. The bottom line is there is a greater demand for capital than there is available capital from institutional VCs and angels. That's why we want to democratize venture capital for the general public, and enable everyday people who are excited about the city's growth, but don't yet know how to engage. Now they can with Wunderfund.co.