We worked hard to make this process as simple as possible. First we do a background check on all Issuers looking to issue securities and ensure that they meet the requirements set forth by the rules in Regulation Crowdfunding. Once Wunderfund.co determines that they are eligible, then they are allowed to build their offering page. If you find a company you want to invest in, then simply create an account, verify your accreditation status, find an investment that works for you, complete the legal documents and fund the investment. When an investment is made, the money is held in escrow until the investment target is met. Once the investment target is met, the money is transferred to the issuer for the sole purpose of the specific project in which you invested.
Yes. All investors, even if considered 'unaccredited', will be able to use Wunderfund.co to invest. While this has opened a huge gate for investors, there are still limitations on the amounts an individual can invest each year. Wunderfund.co will automatically let you know how much you can invest based on your annual income and net worth; as established when you create your personalized profile.
Yes, of course. It's not uncommon for an investor to invest in an offering early when it's launched, and then decide to invest more into the company later. Bear in mind, each transaction is handled separately, and the same investor fees apply to each investment.
If the issuer chooses to do so, they can allow the campaign to accept investment amounts that exceed their targeted investment goals. This is called ‘oversubscription’ of the fundraising amount and usually an issuer sets a limit on how much oversubscription they can accept. If oversubscription is allowed the campaign will close at the earlier of the closing date or when the issuer hits their oversubscription limit. If your investment is within the oversubscription limit, your investment will be accepted, otherwise, if your investment is entered after the investment exceeds oversubscription limits, your investment will be returned.
Wunderfund.co handles all transactions and communications electronically. Once you have established an investor account with Wunderfund.co, and consented to electronic delivery of material, Wunderfund.co will provide you a copy of the Investor Agreement to be signed electronically. A PDF version of the executed forms will be emailed to all parties for record keeping purposes. A copy of your contract will also be available on Wunderfund.co, in your profile.
Generally, the default minimum investment is $50. However, the minimum could be set higher by the issuer who launches the campaign. These will be disclosed on each issuer’s offering page.
The maximum investment allowable in a 12-month period is based on your annual income and net worth. Wunderfund.co will automatically let you know how much you can invest in a given 12-month period once you establish your investor profile. We calculate your maximum investment using the following formulas:
If either your annual income or your net worth is less than $107,000, then during any 12-month period, you can invest up to the greater of either $2,200 or 5% of the lesser of your annual income or net worth.
If both your annual income and your net worth are equal to or more than $107,000, then during any 12-month period, you can invest up to 10% of annual income or net worth, whichever is lesser, but not to exceed $107,000.
We base these limits on a rolling 12-month period from your investment profile.
Calculating net worth involves adding up all your assets and subtracting all your liabilities. The resulting sum is your net worth.
For purposes of crowdfunding, the value of your primary residence is not included in your net worth calculation. In addition, any mortgage or other loan on your home does not count as a liability up to the fair market value of your home. If the loan is for more than the fair market value of your home (i.e., if your mortgage is underwater), then the loan amount that is over the fair market value counts as a liability under the net worth test.
Further, any increase in the loan amount in the 60 days prior to your purchase of the securities (even if the loan amount doesn’t exceed the value of the residence) will count as a liability as well. The reason for this is to prevent net worth from being artificially inflated through converting home equity into cash or other assets.
For an issuer's campaign to be listed publicly on our platform, we conduct a full due-diligence review of the issuer's application. The application includes a business plan, financials, articles of organization and other important documents, as required by Wunderfund.co. Additionally, we conduct a background and credit check on the issuer's founding team members and sponsors.
Wunderfund.co strives to find quality issuers, serious about raising capital. However, these measures do not mitigate the risks of investment through Crowdfunding. Wunderfund.co cannot guarantee any investments made with issuers will return positive results and investors must be aware of, and be prepared to accept, the risks of investing in private offerings; which may include total loss of investment. Invariably, you as an investor have the full authority and discretion to choose which opportunity is right for you and what risks you are willing to take in such an investment.
The investment period is determined by the type of investment made. Equity based investments have a varying range with no maturity date. Revenue sharing models and loan based investments may have a maturity date listed in the offering, providing you with an idea of the time-period for your investment. Generally speaking, the time-period is unknown and you must take this risk into account when making your investment.
Yes, you can join Wunderfund.co for free. You can also browse any of the investments and their offering documents upon request. Take a look to see what's currently available to investors.
Potential investors should be aware of the risks involved in crowdfunding, including the potential for total loss of their investment. Investors should consider whether investing through crowdfunding is appropriate for your desired level of risk. Unless you understand these risks fully, it may not be appropriate for you.
Crowdfunding offers investors an opportunity to participate in an early-stage venture. However, you should be aware that early-stage investments may involve very high risks and you should research thoroughly any offering before making an investment decision. You should read and fully understand the information about the company and the risks that are disclosed to you before making any investment.
The following are some risks to consider before making a crowdfunding investment:
Speculative: Investments in startups and early-stage ventures are speculative and these enterprises often fail. Unlike an investment in a mature business where there is a track record of revenue and income, the success of a startup or early-stage venture often relies on the development of a new product or service that may or may not find a market. You should be able to afford and be prepared to lose your entire investment.
Illiquidity: You will be limited in your ability to resell your investment for the first year and may need to hold your investment for an indefinite period. Unlike investing in companies listed on a stock exchange where you can quickly and easily trade offering on a market, you may have to locate an interested buyer when you do seek to resell your crowdfunded investment.
Cancellation Restrictions: Once you make an investment commitment for a crowdfunding offering, you will be committed to make that investment (unless you cancel your commitment within a specified period of time, as detailed below).
Valuation and Capitalization: Your crowdfunding investment may purchase an equity stake in a startup. Unlike listed companies that are valued publicly through market-driven stock prices, the valuation of private companies, especially startups, is difficult and you may risk overpaying for the equity stake you receive. In addition, there may be additional classes of equity with rights that are superior to the class of equity being sold through crowdfunding.
Limited disclosure: The issuer must disclose information about the company, its business plan, the offering, and its anticipated use of proceeds, among other things. An early-stage company may be able to provide only limited information about its business plan and operations because it does not have fully developed operations or a long history to provide more disclosure. The issuer is also only obligated to file information annually regarding its business, including financial statements. A publicly listed company, in contrast, is required to file annual and quarterly reports and promptly disclose certain events—continuing disclosure that you can use to evaluate the status of your investment. In contrast, you may have only limited continuing disclosure about your crowdfunding investment.
Investment in Personnel: An early-stage investment is also an investment in the issuer or management of the company. Being able to execute on the business plan is often an important factor in whether the business is viable and successful. You should also be aware that a portion of your investment may fund the compensation of the company’s employees, including its management. You should carefully review any disclosure regarding the company’s use of proceeds.
Possibility of Fraud: In light of the relative ease with which early-stage companies can raise funds through crowdfunding, it may be the case that certain opportunities turn out to be money-losing fraudulent schemes. As with other investments, there is no guarantee that crowdfunding investments will be immune from fraud.
Lack of Professional Guidance: Many successful companies partially attribute their early success to the guidance of professional early-stage investors (e.g., angel investors and venture capital firms). These investors often negotiate for seats on the company’s board of directors and play an important role through their resources, contacts and experience in assisting early-stage companies in executing on their business plans. An early-stage company primarily financed through crowdfunding may not have the benefit of such professional investors.
Debt securities are a type of investment where you give a startup a loan. Basic terms will be defined, such as the amount borrowed, interest rate, and the maturity date. The interest rate of debt security is largely determined by the perceived ability to repay the borrower. Higher risks of payment default almost always lead to higher interest rates. The major risk investors bear is that the company is unable to repay them, in which case they are likely to become worthless.
Equity is a way for you to own a percentage of a startup's company. They are highly speculative, and it’s possible you could lose all your money. Generally, there are two types of stock offered on this platform:
Common Stock: This gives a shareholder a portion of the ownership interest in the company. Stockholders may or may not be given a right to vote on corporate matters, and receive information about the company. Common stock is the riskiest type of security since they're last in line to be paid if a company fails.
Preferred Stock: These shareholders have priority over common stock to dividend or distribution payments. Preferred will get paid ahead of common stock, however it will still only be repaid upon liquidation if there is money left over after debts are paid. In certain circumstances (such as an initial public offering or a corporate takeover) the preferred stock might be convertible into common stock. These would be disclosed in the terms of the preferred stock.
Importantly, you should always assume that investing is for the long term, and there’s no secondary market where you can easily resell the securities. Thus, you should never invest more than what you can afford to lose.
A SAFE is an agreement between you, the investor, and the company in which the issuer generally promises to give you a future equity stake in the company if certain trigger events occur. Not all SAFEs are the same and the very important terms governing when you may get the future equity may vary across the SAFEs being offered in different crowdfunding offerings. Despite its name, a SAFE may not be "simple" or "safe".
It is important to understand the terms of any SAFE in which you are investing through a crowdfunding offering. Here are some things to keep in mind:
The most important thing to realize about SAFEs is that you are not getting an equity stake in return. SAFEs are not common stock. Common stock represents an ownership stake in a company and entitles you to certain rights under state corporate law and federal securities law. A SAFE, on the other hand, is an agreement to provide you a future equity stake based on the amount you invested if—and only if—a triggering event occurs. SAFEs do not represent a current equity stake in the company in which you are investing. Instead, the terms of the SAFE have to be met in order for you to receive your equity stake.
SAFEs may only convert to equity if certain triggering events occur. Because SAFEs convert to actual equity in the future based on some future event, it is important to understand what exactly triggers the conversion of the SAFE. The terms of the SAFE may have it trigger in many different scenarios that may—or may not—occur in the future with respect to the issuer.
Depending on its terms, a SAFE may not be triggered. Despite the identified triggers for conversion of the SAFE, there may be scenarios in which the triggers are not activated and the SAFE is not converted, leaving you with nothing (For example, if the company fails to raise a subsequent round of capital, the company dissolves, or there is no liquidation event such as a buyout or acquisition).
Keep in mind other possible provisions of the SAFE. In addition to the trigger mechanism, there are also other components of SAFEs that you should understand. Some things to better understand include the following:
Conversion Terms: These are the specific terms by which the amount you invested in the SAFE gets converted into equity.
Repurchase Rights: Is there a provision in the SAFE that allows the company to repurchase your future right to equity instead of it being converted to equity? Do you have any say into whether your right is repurchased and at what price?
Dissolution Rights: What happens to your SAFE and the money you invested if the company ends up dissolving?
Voting Rights: SAFEs do not represent current equity stakes in the company so do not have voting rights similar to common stock.
There is nothing standard or simple about a SAFE Agreement. Various terms from the triggering events to the conversion price are subject to different treatment by different companies offering SAFEs. It is important to read and understand the company’s disclosure regarding the SAFE it is offering as well as the terms set forth in the actual agreement.
For information about the SEC’s guidance regarding SAFE investments, please see this website.
Raising funds through the sale of a digital currency requires more than just building a blockchain: investors want to know what they are getting into and that the currency will be viable, and they will be legally protected.
Simple Agreement for Future Tokens is a form of investment contract. They were created as a way to help new cryptocurrency ventures raise money without breaking financial regulations; specifically, regulations that govern when an investment is considered a security.
The speed at which cryptocurrencies have grown has far outpaced the speed at which regulators have addressed legal issues. It wasn’t until 2017 that the Securities and Exchange Commission (SEC) provided substantial guidance on when the sale of an initial coin offering (ICO) or other tokens would be considered the same as the sale of a security.
One of the most important regulatory hurdles that a new crypto venture must pass is the Howey Test. This was created by the U.S. Supreme Court in 1946 in its ruling on Securities and Exchange Commission v. W. J. Howey Co., and is used to determine whether a transaction is considered a security.
A “security” can include notes, equities, bonds, and investment contracts, and, broadly speaking, is an investment in an enterprise with the expectation of profit. Because cryptocurrency developers are unlikely to be well-versed in securities law and may not have access to financial and legal counsel, it can be easy for them to run afoul of regulations. The development of SAFT is seen as a way to create a simple, inexpensive framework that new ventures can use to raise funds while remaining legally compliant.
When a company sells an investor a SAFT, it is accepting funds from that investor in exchange for a future token to be used on the network they are developing. Thus, investors receive documentation indicating that, in the event that a cryptocurrency or other product is created, the investment will convert into a functional token.
Developers use funds from the sale of SAFT to develop a functional token, and then provide these tokens to investors anticipating a market in which tokens can be sold.
Keep in mind, there are components of the SAFT that you should understand. Some things to better understand include the following:
The SAFT is highly speculative and involves a high degree of risk.
The token SAFT has no value and you may lose some or all of the money you invest.
In the future, you may not be able to sell your investment in the SAFT.
If the developer is unable to create a functional token for any unforseeable reason, you could lose your investment.
If the market that the token is created for is not a viable market, the token could result in no real value and you would lose your investment.
A SAFT is different from a Simple Agreement for Future Equity (SAFE), which allows investors who put cash into a startup to convert that stake into equity at a later date. Because a SAFT is a non-debt financial instrument, investors who purchase a SAFT face the possibility that they will lose their money and have no recourse if the venture fails. The document only allows investors to take a financial stake in the venture, meaning that investors are exposed to the same enterprise risk as if they had purchased a SAFE.
For information about the SEC’s guidance in regards to ICO investments, please visit this website.
The investments found on Wunderfund.co have limited voting rights for smaller investors. That’s because the founders are concerned that institutional investors or venture capitalists may shy away from investing in future rounds if too many small investors are invested. As a result, the default position is to not include voting rights, unless explicitly stated. Investments in equity will get diluted as future rounds of capital are raised.
Securities may not be transferred by any purchaser of such securities during the one year period beginning when the securities were issued, unless such securities are transferred:
To the issuers of the securities;
To an accredited investor;
As part of an offering registered with the Commission; or
To a member of the family of the purchaser or the equivalent, to a trust controlled by the purchaser, to a trust created for the benefit of a member of the family of the purchaser or the equivalent, or in connection with the death or divorce of the purchaser or other similarcircumstance.
Additionally, it cannot be assured there will be liquidity after one year.
Startup investing is very risky and much different from investing in an open exchange market. The stock market allows you to buy and trade shares in an open exchange at any time. Startup investing does not operate in the same way. When you invest in a startup, your money become illiquid (you are unable to turn your investment into cash) for an extended period. The desired investment outcome is for the startup to reach a level of capital which allows the issuer to pay out on its debts/equity commitments (i.e. through acquisition or a large public offering). This would liquidate the investment and pay out the profits to investors. However, startups have a high risk of failure, which could result in the loss of all the money you invested.
Possibly. That is what the industry calls dilution and is considered quite normal. For instance, if a startup is successful and is growing quickly, 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 are issued to new investors to help fuel their growth. This creates a risk that your voting power, if any, may be limited as your shares dilute. When the number of shares outstanding increases, you own a smaller, or diluted, percentage of the company, making your shares less valuable.
We charge a one-time fee of 2% (~$7-$75) because it let's you keep more of your money compared to venture capital (VC) funds. Generally, VC's may charge a 20%/year fee AND may take a 20% carry of the profit.
Typically, an issuer will be required to publicly disclose an offering policy that will tell investors how they're taking your investment: 1) First come, first served, or 2) pro-rata, where typically higher investment levels have higher priority. If you ever are worried that your investment is too low, you have the right to commit more to avoid the cancellation of your investment. Please note the issuer also reserves the right to cancel any investment under a pro-rata policy. Each offering will have a different pro-rata policy so make sure to carefully review the details of each offering before making an investment decision.
If you want to cancel an investment, you have up to 48 hours prior to the end of the campaign period to change your mind and cancel your investment commitment for any reason. You'll receive a refund of your total investment minus any escrow operation fees. Once the campaign period is within 48 hours of ending, you will not be able to cancel for any reason even if you make your commitment during this period. However, if the company makes a material change to the offering terms or other information disclosed to you, you will be given five business days to reconfirm your investment commitment.
If you're ready to cancel, please email us for instructions on how to proceed.
Yes, the issuer and Wunderfund.co will have the right to cancel your investment; although it is unlikely. All issuers have cancellation rights in their legal terms and could cancel for any reason. For example, the issuer may 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.
Additionally, Wunderfund.co reserves the right to cancel your investment if we become aware of any fraudulent or misleading information you filed with your investor application and profile. They may also cancel your investment if you fail the security clearance set by the escrow agent and are not vetted by the issuers themselves.
A fundraising round will close at the offering end date (always at 5:00pm UTC-5), as established by the issuer. However, if a campaign is not taking oversubscriptions, 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 five days to reconfirm your investment.
If a campaign does not reach its funding goal, you will be notified via email and receive a full refund for your investment minus any escrow transaction fees with that issuer.
All refunds will be initiated as fast as possible. It can take up to seven days for a refund to be processed since we use a third-party payment method.
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 personal investor profile page. There you can see which campaigns you have committed to as well as the history of the ones you invested in previously.
Companies who raise funding using Regulation Crowdfunding are required to file an annual report with financial statements, no more than 3 months after the end of their fiscal year.
There are some situations where the issuer is not obligated to provide an annual report, such as if the company issued an IPO, is acquired, has less than 300 shareholders after 1 year, becomes insolvent, or has more than $10M in assets after 3 years.
In such instances, the issuer may cease to publish annual reports and may terminate in the future.
Reports are self-certified by the CEO and include a business discussion. In these reports they are required by law to include only factual information and not speculative revenues. Additionally, they cannot omit information such as fraud, lawsuits, or a major flaw with internal controls. Failure to comply with these ongoing reporting standards will exempt companies from a regulation crowdfunding offering.
Every issuer is different where some may be more engaged with investors. These additional rights are typically spelled out in the investor agreement documents.
Additionally, Wunderfund.co may or may not have an ongoing relationship with the issuer after completion of the offering. Therefore, Wunderfund.co may not be a source of information for investors about offerings they participated in, if Wunderfund.co is not involved with the issuer beyond the offering.
The companies that raise money on the Wunderfund.co are private companies who will issue securities in the form of a loan, a SAFE, equity, or mixed offering to their investors. These securities will describe the terms of your investment. If your investment is successful, you will be re-paid your investment according to the terms of the offering. However, it should be understood that investing in start-up companies is inherently risky and you must be able to afford the loss of your investment.
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.
Startups are valued based on the market demand determined by the professional investors looking to invest in them. The valuation can fluctuate over time based on the age and 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.
For more information regarding Crowdfunding and applicable regulations, or about The Wunderfund, please visit the following sites: