How does the investment process work?
We worked hard to make it as simple as possible to commit to an invesment. Simply create an account, verify your accreditation status, select an investment that works for you, signing legal documents and funding the investment. When an investment is made, the money is held in escrow until the deal closes. Once the investment target is met, the money is transferred to the project company for the sole purpose of the specific property being invested in.
Can anyone invest using this portal or do you have to be an accredited investor?
Before May 16, 2016, only wealthy people and banks were considered 'accredited investors' and allowed to invest in private companies. All that has changed with the Jobs Act, which allows the average American to invest using regulation crowdfunding. Although this has opened up a huge gate for investors, there are still some limitations on the amounts you can invest each year. Wunderfund.co will automatically let you know how much you can invest based on your annual income and net worth you set up in your profile.
What happens when rounds are oversubscribed?
If the company chooses to do so, they will accept oversubscriptions for the fundraising amount, usually setting a limit of how much they can accept. If they choose to do so, the campaign will close either when the date hits, or they hit their oversubscription limit. If it hits the limit, your investment will go through.
How are contracts signed?
All the signatures are handled electronically. once a contract is signed by both parties, a PDF copy of the executed forms will be emailed to all parties for their record keeping. A copy of your contract will also be available on Wunderfund.co in your profile.
What is the minimum and maximum amount I can invest?
The minimum investment is typically $100. However, the minimum could be set higher by the issuer who launches the campaign. These will be disclosed on their offering page. The maximum investment amount allowable per year is determined by calculating 10% of your gross annual income or net worth (whichever is greater). You must complete your account accreditation in order for us to calculate the maximum investment amount. If you do not, the default maximum is set at $2,200 a year per Reg CF regulations set by the SEC.
How are investments pre-vetted before being listed?
In order for an issuer's campaign can be listed publically on our platform, we conduct a full review of the the issuer's application. The appication includes a business plan, the financials, articles of organization, and other important documents. We then conduct a background & credit check on the issuer's founding team members & sponsors. Importantly, these measures don't take away the risks in the investment and Wunderfund.co cannot gaurantee results. What the vetting process aims to do is put quality startup companies for you to select from so you get quality deal flow. You as an investor have the full authority and discretion to choose which opportunity is right for you and how much you want to invest.
Is it okay if I've issued equity before via another crowdfunding site?
Yes, you can issue equity even after you've done so on another crowdfunding site, however you are prevented by law from running multiple campaigns on different platforms at the same time. That would be in violation of guidelines set by the SEC.
How long is the investment period?
The timeframe depends on the investment type. Equity based investments can range as long as 5-10 years. Revenue sharing models and debt-based investments can pay back in shorter time frames. You'll be able to see what the expected period of investment is before you commit to an investment.
Is this free to join?
Yes, you can join Wunderfund.co for free. You can also browse any of the investments on the site to see what's currently available to invest in. However, if you want access to an issuer's secured documents, growth plans, and other important information that will inform you before you invest, you have to create an account and sign in.
What is startup investing and is it for me?
Investors who back startups do so for different reasons. For us, we believe in founders who have great vision, purpose, and a great idea that has a possibility for a return. You should know that investing in a startup means you're willing to take that risk of losing it all if the startup fails.
What are equity investments?
Equity investments are high risk/high return investments. They are inherently risky and there's a risk you could lose every dollar you invest in a startup. You also have to wait over 5+ years for a return in some cases. Equity investments are definitely not like the stock market where you can buy and sell your shares. Startup companies will either fail or succeed. Success happens if or when they are acquired or go public with an IPO. So, you must believe in the companies and their success before putting any money into them.
What are debt investments?
Debt is less risky and also carry less of a potential return compared to equity investments. Importanlty, there's a still a risk that debt may not get paid back, so as with any investment on the Wunderfund platform, you should only invest what you can afford to lose.
Am I able to resell my investment?
It's best to expect you cannot resell your investment. Regulation Crowdfunding law restricts the resale of securities for at least one year, and after that, it can only be sold back to a restricted group of individuals (i.e. the issuer, an accredited investor, a family member, or trust). Plus, there is no open stock market exchange where you can buy or sell your equity. Lastly, all the equity based securities on Wunderfund.co are prohibited for resale based on the terms & conditions set by the issuer to protect the number of shareholders on their cap table.
Will my percentage ownership be reduced over time?
Yes, that's what the industry calls dilution and can be quite normal. For instance, if a startup is successful and is growing fast, it may need additional rounds of financing to support the growth. Provided the company's value increases, during the subsequent round of financing, additional shares of stock is issued to new investors to help fuel their growth.
How is startup investing different from investing in the stock market?
Startup investing is very risky and much different from stock market investing. The stock market allows you to buy and trade shares in an open exchange at anytime. Startup investing does not operate in the same way. When you invest in a startup, you will tie up your money for an extended period and the result is binary. The desired result is for the startup to get acquired or goes public, which would liquidate the investment and pay out to investors. But startups have a high risk of failure, and if they do, you could lose all the money you invested.
Are there ways to decrease the risk of startup investing?
Diversifying your portfolio is certainly important so you don't have all your investment eggs in one basket. Some investors like to back startups on a product or service they would actually use. While other investors like to back startups that operate in an industry they have experience in. Regardless of how you diversify, always do your homework so you can make an informed decision.
Can I cancel my investment and get a full refund?
If you want to cancel an investment, you have up to 48 hours of the end of the campaign deadline to get a full refund. After those last 48 hours, you can no longer cancel your investment.
Can the issuing startup or Wunderfund.co cancel my investment?
It's possible, but will likely not happen often. The startups have cancellation rights in their legal terms and could cancel for any reason. A likely scenario is that they discover that a competitor is trying to invest in the company to gain information. That only seems fair for them to be able to cancel, right? Only when the fundraising round is closed, and the funds have been transferred from the escrow account, will you be sure that your investment cannot be canceled.
When does the fundraising round close?
A fundraising round will close at their offering deadline. However, if a campaign is not taking over-subscription, the round will close when the funding target has been met. If the company decides to extend their fundraising deadline, you will be notified via email and you have 48 hours to reconfirm your investment.
What happens if the campaign doesn't reach its funding goal?
If a campaign does not reach its funding goal, you will be notified via email and receieve a full refund of that specific investment.
How long will it take to receive my refund?
We'll initiate a refund as fast as possible but it can take up to 7 days since we use a third party payment method.
How can I track campaigns I've invested in?
Anyone can view the status of a campaign in progress from the browse page, which will show all active offerings. You can see how much has been raised to date, and how many days are left before the offering closes. If you want to review your previous investments, you can track that on your investor profile page. There you can see which campaigns you've commited to as well as the history of the ones you've already invested in the past.
What updates should I expect after investing?
The founders are required to issue an annual update at least once a year at a minimum, but we do encourage founders to provide quarterly updates via email or newsletter (though it's not a requirement).
What relationship will a company have with investors post-closing?
Every company is different where some are more engaged with investors who tend to be it's most loyal customers too. These additional rights are typically spelled out in the investor agreement documents.
Is there a way I can personally help the startups I invest in?
Some of the best help you can give is by becoming an advocate for the startup. Introduce them to potential partnerships, sales opportunities, and other relevant people in your network.
Do I receive an annual report?
For all Regulation Crowdfunding offerings, the issuing company will provide an annual report with all their financial statements and a state of the business. This is required to be sent 3 months after the end of the fiscal year (which can be different from calendar year). There are situations where they are not obligated to provide an annual report. For instance, if the company is acquired, issues an IPO, your investment is repurchased. Other instances are if they have <300 shareholders after year 1, go bankrupt, or have less than $10M in assets after 3 years. On rare occassions, a startup may decide not to file an annual report, because they do not plan to do another Regulation crowdfunding campagn and find that venture capitalists are throwing money at them. In that rare case, you won't have the current financial information.
How do I earn a return?
The companies that raise money on Wunderfund.co are private companies who will issue a SAFE note also known as a convertible note to their investors. This simply means that your investment amount will convert to stock when a proper value is placed on the company, which typically happens when the company raises a subsequent investment round from instutional investors who put a price on the company. If the company grows successfully, the value of the stock increases with each round of financing until the company is acquired or goes public in an IPO at which point you can sell your shares.
How are payments collected and remitted to investors?
If a company is successfully acquired, Wunderfund.co will collect the payments directly through a third party servicing company and will remit the payments directly to investors net any processing fees. All projected returns or distributions along with the schedule are unique to each offering and will be clearly spelled out in the offering page for that campaign.
How is the value of a company determined?
Startups are valued based on the market demand determined by the professional investors looking to invest in them. The valuation can flluctuate over time based on the age & stage of the company as it grows and matures. Generally, early stage companies are worth less than later stage companies that have raised several rounds of financing.