April 8, 2026 • 57 mins
Most founders try to raise money by pitching people who don’t understand their market, don’t share their mission, and still want control. We sit down with Read Ezell from WeFunder to explain a different option: a community round, where your customers and supporters can invest alongside bigger checks and help you build momentum you can’t buy with ads.
We get practical about how Regulation Crowdfunding (Reg CF) actually works, why the JOBS Act matters, and how WeFunder uses an SPV structure so you don’t end up with hundreds of names cluttering your cap table. Reed shares real examples, from neighborhood hospitality to mission-driven companies, and why early-stage capital is often emotional and relationship-based even when people pretend it’s purely rational.
We also dig into the nuts and bolts founders worry about: how often you can raise, what financial disclosures are required at different tiers, and why entity choice (C-corp vs LLC vs S-corp) can make or break the admin burden. Then we tackle deal terms like SAFEs, valuation caps, preferred equity, convertible notes, and when revenue share can fit. Finally, we address the big truth of private investing: liquidity is limited, so expectations and communication matter as much as the raise itself.
If you’re thinking about fundraising for your small business, listen, take notes, and share this with a founder who needs more options. Subscribe, leave a review, and tell us what kind of business you’d actually invest in.
Subscribe and tune in for new episodes of Big Talk About Small Business with Mark Zweig and Eric Howerton. Each week we focus on practical insights and real-world strategies to grow your business!
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Episode Transcript
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SPEAKER_03 (00:00):
Some of the companies that we're working
with are uh raising, like Isaid, raising venture capital
and using our platform as moreof like a community engagement
and marketing ploy thananything, right?
It's like uh missionally or likethey just want they want their
customers to be able to invest,right?
And this is the the mechanismthat allows them to do that.
SPEAKER_05 (00:25):
We kick it off the same way every time.
Okay.
Because we're boring as hell.
This is another episode of thatbig talk about small business.
Businesses.
SPEAKER_04 (00:37):
Different every time, my friend.
It is.
We we like to mix it up.
So today we're with Reezell, andReed is again it sounded like
you said Rezel.
Reed Azell.
Is that not the properpronunciation?
SPEAKER_03 (00:50):
You don't call it Zell actually, but it it's easy
to drop the E.
You cut it.
It's easy to sound a little bitintoxicated saying my name.
I think you have the linestogether.
SPEAKER_04 (00:59):
Reed Zell.
Read Re Reed Zell.
No, we've got uh Reed Azell herewith it.
Read Azelle.
And I got acquainted with Reedfirst through the WeFunder.com
platform.
And that's why we wanted to gethim on the show today because
that is a crowd, what do youcall that?
A crowdfunding platform?
(01:21):
It's not exactly that.
SPEAKER_03 (01:22):
Yeah, we like to avoid using the word
crowdfunding.
We we call it raising acommunity round.
Um I think you know,crowdfunding sounds like
something that, you know, itsounds like a Kickstarter, it
sounds like something you'redoing.
Yeah.
You know, we really like to leaninto the the the idea that we're
we're opening up angel investingto anyone, right?
It community around hill alignsis more more with uh a
(01:44):
traditional venture round orother types of equity funders.
SPEAKER_04 (01:48):
So could they with the community round funding
platform of WeFunder.com, like Isaid, um I'm just kidding, Reed.
Um, but it's really beeninteresting for me.
I knew nothing about Wii Fundermonths ago when I first reached
out to them.
I was um turned on to them byLuke Regnier.
(02:08):
He's been another guest on ourshow.
And Luke suggested that with oneof the companies that we're both
involved with as owners, that umwe take a look at WeFunder as a
way of opening up the equity toa larger group of people,
particularly this very loyalcustomer base that we have.
(02:30):
Yeah.
And uh, you know, I'm not gonnasay it's been easy necessarily
in every way, but it it has beensuccessful, and we have raised a
significant amount of equitycapital from a completely new
group of investors because ofWeFunder.
So, Reed, tell everybody alittle bit um first um uh about
(02:53):
yourself, and then I want to getinto WeFunder, and you can tell
us all how it works and how thatwould be helpful to many small
businesses out there.
SPEAKER_03 (03:01):
Yeah, I mean, um I'm excited to be here.
Thank you.
Obviously, you guys you guys arefocused on kind of the
practicalities of buildingfunding, running small business.
Um that's something that one onepart of that is something I
spent a lot of time thinkingabout.
Um my name's Reedy Zell, like Ilike we said at the top.
(03:21):
I'm based in Nashville,Tennessee.
It's where I was born andraised.
Um WeFunders are based in SanFrancisco, but I found my way to
WeFunder kind of by a circuitousroute.
I uh when I I left home andspent most of my 20s living in
other countries.
Um I was a consultant, I was ateacher, I did I thought that
(03:43):
for a while I was gonna be anacademic.
Uh once I got into that,realized that that was really
not what I wanted to do.
And I not in the financialservices industry at all.
Uh most of my 20s just been inin Egypt, Saudi Arabia, and
Qatar.
Um, I when I came back, I whatI've always been interested,
(04:03):
though, is kind of interested inthose these kind of big problems
creating kind of opening up moreaccess, right?
When I first went to the MiddleEast, it was about helping
people understand more aboutthat part of the world.
As I got older, I realized thatI could have more impact back
home.
Uh that's what brought me backto Nashville.
Um, and I really fell intoworking at Wii Funder um kind of
(04:27):
accidentally.
I founded a nonprofit when Imoved back home to the country,
uh, back back to Tennessee,piloting a social impact uh
experiment, piloting aguaranteed basic income in a in
a specific neighborhood inNashville, which is back kind of
six or seven years ago now.
Um and I met uh the president ofWeFunder who lives in Nashville
(04:50):
as well, through that.
Um kind of my experiencefundraising for that initiative
and my experience trying tofigure out how to do this thing
from with without much precedentwas kind of what led into me
working at WeFunder.
Um it was also a realizationthat I didn't want to stay in
the nonprofit space.
Um but really at WeFunder, whatI do now is I help founders
(05:12):
raise capital.
Uh I helped them understand wasa new way to raise money, uh,
different than traditional bankdebt or you know, venture
funding.
I think WeFunder kind of canslide up and down the scale
closer to either one of those,but generally fits in the
middle.
Uh, and engaging communities offolks uh to be investors in
(05:34):
their business.
Uh, we talk about letting yourfans and community invest in
your company.
Um uh and I I think it's a it'sa can be a really powerful
mechanism.
SPEAKER_05 (05:47):
Hey, Ray, going back to the very first comment you
made when Mark uh incorrectlycalled you a crowdfunding
platform, which I apologizeabout that.
Like obviously everybody knowsthat except Mark.
Mispronounce my name.
Yeah, right.
Mispronounce your name.
Got your what you guys docompletely wrong.
SPEAKER_03 (06:10):
I mean, uh I mean it is what we do, right?
Fundamentally, fundamentally,what we're doing is letting any
like so to take even a step backfrom crowdfunding and what
WeFunder does today, right?
WeFunder was started by a couplefolks who were young
entrepreneurs and they felt itwas silly that they couldn't
invest in their friends'businesses.
(06:31):
Right?
They're not rich people.
They're they're people that areyou know working alongside
founders every day, and theywanted to be able to write a
$1,000, a$5,000, you know, asmall check into their friends'
businesses to support them.
Uh it turned out that was illthat was illegal.
Um, you know, under intraditional uh uh under the SEC
(06:52):
regulations, I think it was 1933until 2016, it was illegal for
someone who was unaccredited,meaning um they had a net worth
of under a million dollars or anincome of under a quarter
million dollars to invest in aprivate company.
Um the founders of WeFunderWeFunder actually started as a
(07:15):
petition to uh ask Congress toinclude in uh in law the ability
for regular folks to invest inprivate businesses.
Um and that's how we fundersstarted.
Um what year was that?
The law was called the Jobs Act.
It was passed in, I think itwas, you know, developed in
(07:35):
2012, passed in 2013.
WeFunder went through YCombinator in San Francisco in
2013.
It then took the SEC about threeand a half years to put rules
around this.
So regulation crowdfunding,which is what the regulation
regulators call this, has beenlegal since 2016.
And what it allows is anyone toinvest uh small amounts in in a
(07:59):
company.
Now, there's been a little bitof a circuitous route since
then.
I would say the way that theregulations worked initially
wasn't all that great.
They're iterating on the onthis.
Um, but you know, WeFunderbasically started as a uh on the
belief that it's un-American,that you can't, you know, you
(08:20):
can go to Las Vegas and gambleyour money.
Why can't you invest in a riskystartup?
SPEAKER_05 (08:27):
So and I guess the way that it all works is like it
ends up, I mean, are all thepeople that are investing, are
they kind of falling underneatha single, like is it like a
single entity that they'rebasically Today?
SPEAKER_03 (08:40):
Yes.
So in the way that it wasoriginal, when I say that the
regulations didn't work all thatwell at first, um today, if
you're investing on the WeFunderplatform, in 99 out of 100
cases, you're investing into anentity called a special purpose
vehicle, which uh in startupinvesting is a very established
term, but most people don't knowwhat that means.
(09:03):
Basically, it just means thatyou're actually not investing
directly in the company, you'reinvesting in an LLC that is then
pooling that the capital of alot of people investing directly
to the company.
And so what that means for thecompany is that rather than
adding a thousand investors totheir cap table, they're they're
adding one.
There are a thousand peoplerepresented in their cap table
(09:23):
by that LLC, which is veryimportant for companies that
want to raise multiple rounds ofcapital.
You can't having a thousandpeople on your cap table if
you're a really early stagecompany, um, and you want to
raise, for instance, venturecapital, is going to be a very
big red flag.
Um, but yeah, so it's it's asingle line in your cap table.
Anybody can invest.
(09:43):
And the ways that that works,it's it's pretty various, right?
Um, some of the companies thatwe're working with are uh
raising, like I said, raisingventure capital and using our
platform is more of like acommunity engagement and
marketing ploy than anything,right?
It's like uh missionally or likethey just want they want their
(10:04):
customers to be able to invest,right?
And this is the mechanism thatallows them to do that.
Um one of my favorite races ofall time, though, is a is a wine
bar that's about four blocksfrom my house in Nashville
called Bad Idea.
Uh uh the the the guy whostarted it was uh um you know he
(10:25):
was a Somolier in fine diningrestaurants in Nashville for a
decade.
Coming out of the pandemic, hewanted to, you know, run his own
place.
And he he said what he said ishe'd spent a decade convincing,
you know, telling people thatstarting a wine bar in Nashville
was a bad idea.
That's where the name came from.
Um but you know, I I pitched himon, you know, rather than going
(10:46):
to a restaurant group andsharing 50% ownership with a
restaurant group that would thenwant to have a pretty
significant say in terms of howhe ran his business and maybe
even push it away from you knowbeing a wine-focused restaurant
to something that traditionallyworks better in our market to be
you know a more you knowfood-focused restaurant where
the margins are a little bitbetter or but where the where
(11:09):
there's a more of a marginsaren't better, but there's a
more proof and mall.
He decided to raise on weedfunder.
He raised three quarters of amillion bucks on WeFunder.
You know, he had a couplebigger, he had a couple of
backers lined up before, but heraised that capital from I think
around 150 people.
You know, some of those werepeople in the neighborhood.
Uh, some of them were people, alot of them were people that had
(11:31):
known him from uh coming intoand in into restaurants that
he'd worked in over the over theyears.
Some of them were you knowfellow restaurant, uh
restaurant, you know,hospitality workers that just
wanted to support him, right?
And people, you know, peoplesupported him at um you know
$100,000 and uh um and$100.
(11:53):
Sorry for the I don't know whatjust popped up in my camera.
Yeah, what?
Um but uh you know that I that'sthat's not a venture capital
raise.
It was about engaging peoplethat wanted to see this thing
happen and that believed in him.
And ultimately, that's what Ithink early stage capital is
about.
Uh, even if you're talking to aventure investor, right?
(12:15):
They're investing in the team.
Who knows the team better if youdon't know venture capitalists
than the people that know thepeople that know you personally?
SPEAKER_04 (12:22):
Yeah, I think the Janice um capital raise or
Paragon Motorcycles Inc.
Um reflects that too.
I mean, we just have people whothey like our product or they
have dealt with the company as acustomer in some way and they
and they like the company.
And it's not necessarily apurely rational decision like a
(12:43):
typical, you know, privateequity or venture capital
investor would make, where it'slike, okay, well, I need to get
a 10x return in the next threeyears.
You know, it's it's much moreemotional than it is necessarily
logical.
SPEAKER_03 (13:00):
I well, first of all, I would argue that a lot of
venture capital investments aremore emotional than venture
capitalists would would like toadmit, right?
Like people wouldn't there's alot of gut in that industry as
well, right?
Sure.
And there's a reason why venturecapital tends to, you know, is
is really weighted toward peoplethat look like venture
capitalists, meaning, you know,white male founders that went to
(13:23):
really great colleges, right?
It's like that's not that's notbecause of that's because of
just everyone believes in thepeople that look like them
because they know that they didthey did a thing, right?
I I I don't I think that's akind of a uh on a um a very
understandable bias of thatindustry.
Not that it's good or you know,I don't I I think that you could
(13:47):
probably argue that it's a it'sa very bad thing, that that um
kind of inequality in thedistribution of capital.
But um but yeah, you're a weefunder, you're tapping into a
different kind of approach toinvesting.
Doesn't mean that you're notgonna see a return, but a
venture capitalist is you knowhas to invest in a company that
(14:10):
it they they're investing in thecompanies that they think have
the most likelihood to returntheir fund, right?
That the logic of venturecapital is that every company
that I invest in needs to havethe potential to a thousand X.
Right?
There are a lot of businessesout there that have the
potential to 10x.
And I don't need to, and I don'tneed if I'm not a venture
(14:31):
capitalist, I don't need to, youknow, I can I can invest in
those businesses.
Um and so it open it kind ofopens up the logic a little bit,
right?
Invest in passion because youknow maybe you're just investing
because you like the person, butalso maybe you because you're
closer to in in Paragon's case,right?
Like you know the motorcycleindustry, you see the potential
(14:53):
of small displacementmotorcycles.
Venture capitalists aren't goingto invest in that because it's
definitionally a niche market.
But like if you've seen thatgrow and you believe in this
this company, go ahead andinvest.
Um, and we think that there's alot of knowledge and a lot of
like potential returns ininvestments like that.
SPEAKER_05 (15:13):
What what so tell us a bit more or read on the
mechanics here?
Like, I guess first of all, doesit does it matter what stage a
company is to get involved to toengage with WeFunder?
SPEAKER_03 (15:27):
No.
Um now it matters what stage acompany is to how much money
they could raise, right?
Um and I think that that's oneof the biggest pitfalls that we
see is you know, people come tous and they're like, hey, we
want, you know, the most you canraise uh in under the regulation
that we traditionally work underis uh called you know regulation
(15:48):
crowdfunding, uh, is$5 billion.
Now, to do that, you needaudited financials.
There's some friction there tobe able to do that.
But most of the companies that Italk to shouldn't shouldn't set
out to raise$5 billion.
What they should set out to dois engage a community, and they
should set out to raise thecapital that that community can
support.
And then they should use the WiiFunder platform to expand that
(16:10):
community, right?
What the power of regulationcrowdfunding does is allow you
to accept anybody as an investorand then you two publicly
solicit for investment, whichyou can't do in a traditional
fundraiser.
Okay.
That public solicitation is insome ways helped by WeFunder,
but it could also be, you know,um to email, you know, getting
your friends to email theirfriends.
(16:32):
Yeah.
Uh, or sure, you know, gettinggetting on a podcast and talking
about the fact that you'reraising capital, right?
You can kind of expand yoursurface area of investors that
way.
And so I I think one of thebiggest mistakes the companies
make is they think, okay, I needI need X amount of dollars in
the next two years.
That's what I want to raise onWee Fund or today.
Really, what you should bethinking about is okay, I've got
(16:55):
X amount, I've got a communityof this size today.
And I think that I canreasonably expand that community
through this process from X toyou know 2X or 3X and estimate
that the amount of money thatthat could represent.
And may it, and the mosteffective companies that we see
do this are doing it repeatedly,right?
(17:16):
Like you build a community overtime that stays engaged and sees
your growth and follows yourstory, and that's where this
becomes incredible, verypowerful, right?
Um it's not I'm gonna raise$2million in the next two months
from a bunch of hundred dollarinvestors.
It's I'm gonna raise maybe it's$200,000, maybe it's$500,000,
(17:36):
maybe it's a million, that I'mgonna then continue to engage
them and build in in kind of uhbring them into the process of
building the company.
And then it's not just aboutmoney, it's about um, you know,
community engagement.
It's about having a you know abuilt-in street marketing team
of people that are gonna go outand try to help you make
(17:57):
connections.
And if you hit some milestones,those same investors are will
are likely to invest againbecause on paper you've
increased the value of the city.
SPEAKER_04 (18:05):
That's the key right there.
It's it's performing, and thenyou make believers out of them,
and then they become so you cando another round?
SPEAKER_05 (18:12):
Yeah.
How many rounds can you do?
You can do it every year.
As much as once a year,basically.
You can do once one time perannual per year.
SPEAKER_03 (18:21):
You could you could you could launch multiple raises
in a year.
The the caps in terms of howmuch capital you can raise are
set in a 12-month time span.
Okay.
So they kind of that numberresets.
Uh so explain that.
If you're raising a small yeah,so the way the regulations are
set up uh for regulationcrowdfunding, right?
(18:44):
There are three kind of tiers ofa reg CF raise.
And so uh and there's differenta different set of um financial
disclosures that are arenecessary uh for those three
different levels.
You can raise up to$124,000.
Basically, you the kind of thebiggest downside of Reg C F or
(19:06):
friction point around Reg C F uhis you are publicly disclosing
your financial statements.
But under$124, they are justself-compiled.
Up to$1.24 million, you have toget a CPA to review them and say
basically, yeah, this makessense.
And then above$1.24 million, youhave to get those financials
audited, up to$5 million.
(19:27):
And so raising repeatedly doescreate you, you have to
basically build into yourbusiness that you're gonna keep
your books clean and and um uhget these, uh get a review or an
audit every year.
Um, you know, the first timepeople do that, it tends to be
very painful, but then if youkeep things in order from there,
it it becomes less painful.
(19:49):
But but yeah, I mean you couldraise repeatedly.
Um the way that we think thisshould be done is kind of it's
not about Reg C F, it's notabout the regulation, it's about
the philosophy of capital.
It's this is a this is adifferent way of a different
source of capital.
Like I said, bank debt, venturecapital, traditional angel
(20:10):
investors, all those are peoplethat you might go to.
Your community is just anotheramong those, and we should be
stacking that that alongside allthose different sources of
capital.
Um but yeah, the the valuethough is the public promotion
of this, right?
So I you know I'm biased, but Ithink a way that a company
should do this is if you'regonna raise money, set up an
(20:33):
account on WeFunder, startbuilding a community, start
communicating with them, run afundraise, uh, continue to
communicate with them, updatethem, and then maybe in 12
months you do another fundraise,right?
It's it's it's not you're you'rebuilding this kind of muscle of
communicating with yourcommunity into the operation of
your business.
And what it does is createoptions for you, right?
(20:56):
If you are a company that's onthe venture ladder uh and you
haven't hit the milestones in,you know, at the end of 2026
that you want it to, yourcustomers are probably like, if
they like what you're doing, aregonna be ready to invest to help
you get to those milestones sothat you're ready for your next
venture raise.
There are a lot of companies outthere that aren't on that
venture ladder, right?
(21:18):
Um, rather than taking on debt,what this is is basically
friendly capital from the, inParagon's case, motorcycle
owners in bad ideas case, wideenthusiasts, right?
That um are you know tradingaccess and you know, they want
to be in the in the process, butthey're willing to help you grow
the business.
SPEAKER_05 (21:36):
So it's like somebody should look at this as
like, I went public and I'm nowI'm doing shareholder meetings,
I'm taking care of you.
You want you don't want yourshareholders to start selling
stock.
SPEAKER_04 (21:46):
Yeah, I think the thing communication.
Yeah, it's a good discipline,probably to have just in your
business in general.
You're not commingling yourpersonal stuff with it, because
that would be wrong.
You've got to have good account.
Accounting, right?
And you've got to have goodinformation sharing with your
owners.
Those are all sort of gooddisciplines.
SPEAKER_05 (22:07):
Hey, Reed, when you're can you hear Mark
chomping on his chewing gum whenyou're talking?
Because I mean, I'm sure.
Okay, our audience.
Sorry about that audience thatMark is continually smacked in
the microphone, but I'll getback to the business part of it.
SPEAKER_04 (22:22):
I got the gum from you.
SPEAKER_05 (22:25):
I just didn't know you were going to be like
putting your face against themic and like smacking it.
Should I do it again?
Yeah.
I can hear it now after moon.
It's disgusting, isn't it?
Oh, no worries.
SPEAKER_04 (22:38):
Anyway, I just want my lips open for that thing.
SPEAKER_05 (22:41):
You know what I do like, Reed, but one thing you're
talking about.
So I get extremely irritated.
I'm like a really bad CapitalRanger with because I get so
irritated.
And you made a really goodcomment that I wouldn't point
out to the audience.
My irritation comes whenever I'msitting here, I got this
company.
Take podcast videos, forexample.
(23:02):
We know podcasting's growinglike crazy.
It's actually outperformingradio now.
There's more listeners onpodcasts and our radio for the
first time ever.
So it's overcome a major mediaoutlet.
But that's that's just thepodcast part.
Then you got video.
YouTube's the biggest mediacompany under the sun.
And it's all video.
All social media is using video.
(23:23):
And then I go to uh, and so wedo both, right?
Yep.
At our company called PodcastVideos.
I go your firm does again, Eric.
Podcasts and videos.
That sounds like a good thing.
Right, yeah.
I mean, like obvious.
But you go to investors andthey're like, man, I don't know.
I don't know.
And you have to explain to them17 hours worth of explanation.
(23:45):
They want to see a bunch ofstupid data points, and they
still leave.
And like you mentioned before,it's like, how freaking obvious
is this in is this business thatwe're in that you can't even get
past the thought, and but you'repoor money some of the dumbest
things I've ever seen my entirelife.
SPEAKER_03 (24:02):
But show them show them, don't tell them.
Right, exactly.
Right?
You shouldn't, you should likethe biggest mistake that I
think, you know, I've neverraised equity capital.
I've helped a lot of peopledoing it.
So, like, you know, I I don't Idon't claim to be an expert
here.
Like I said, I I ended up inthis kind of by accident.
I've loved my job and I lovehelping founders raise capital.
But the state the mistake that alot of first-time early founders
(24:26):
make is like they're they'reheads down in the business and
then they decide they need toraise money, and that's when
they start trying to talk toinvestors, right?
Where what you should have beendoing is telling investors about
all the things you're doingheads down in the business for
the past six to 12 months.
Because then you don't need tospend 17 hours, right?
(24:46):
You've built that you've gottenbuy-in.
Not every investor is yourinvestor, and the ones that are
your investor will have stoppedfollowing your updates, right?
And so the people that are thereare the ones that are there for
you.
SPEAKER_05 (24:59):
Well, the one the the big point I was going to
make, though, was as youmentioned, motorcycle
enthusiasts investing inmotorcycles, wine enthusiasts
investing in the wine business,people that like podcasting
investing in podcast videos,people that are social media
video creators investing in acompany because they know they
(25:19):
understand, they understand thegoddamn market, and they don't
need a bunch of freaking othertypes of objective leverage
going on.
I'm like, I'm a wine enthusiast.
I really appreciate wine.
I can see why people would cometo this place.
Sure.
You're a great business, youseem like a good person.
Yeah, you've done this before.
Here's 250 bucks, here's$5,000,whatever.
(25:42):
That's that community thing thatyou're talking about.
That's when you said that, thatkind of gave me a little bit of
a breath of fresh air thatthere's a different way for a
founder to capitalize theirbusiness with a community, like
you're saying, that can supportthem.
SPEAKER_04 (25:58):
Yeah.
And and the other thing is thatthey, like Reed said, I think
early on, is they're notnecessarily going to try to
control your business and missand and take you off the rails,
which we all know.
I mean, I call it the goldenrule.
He or she has the gold rules.
Yeah.
And of course, you and I bothtalked about that.
So many founders, they're stuckin this ridiculous model of I
(26:20):
come up with an idea and then Igo out and raise and I do my
business plan and then I goraise outside equity capital to
investors who immediately nowcontrol my business.
So I wanted to be self-employed,now I'm not self-employed.
SPEAKER_05 (26:33):
Yeah, you're you're in a very risky employment.
You basically quadrupled yourrisk and you're still employed.
SPEAKER_04 (26:41):
I think the other thing too is it makes it easy
for somebody like yourself.
Let's just say as an example, ifyou wanted to take podcast
videos onto WeFunder, it givesthem a chance to know a little
bit about you and your successas a business builder and
entrepreneur and exit and youknow, and successful exit guy
(27:04):
without having to do thatyourself in a real, you know,
you're kind of self-conscious.
Like you wouldn't go to somebodyand brag and go, hey, you know,
I've done that.
But if they see the story rightthere, yeah, they can read that
and they know a little bit aboutyou now.
And it, I think it's going tobuild more trust.
Yeah.
You know, that I totally agree.
SPEAKER_03 (27:25):
I think it's like it's it's a really big miss.
But it's it's also it doesn'thave to be either or, right?
Like we see companies raise ourWeFunder, and it's actually it
becomes the proof point to thebigger investors, right?
It's like a story that we'vetold for a long time.
This is before my time atWeFunder, but it was a company
called Um I started to tell thestory, and now I'm getting the
(27:47):
name of the company.
Um they were they were workingon a solution for just to to um
to solve uh cure cancer in dogs,right?
They went through, you know,they're they're trying to raise
venture money, but this is likea big problem.
And they were talking toinvestors, and um, and the
investors were like, hey, yeah,we don't really see the market
here.
Like, who's gonna spend you know$10,000 to on a treatment for
(28:10):
their dog?
They came together and theyraised exactly people people
that like love their dogs willwill do that.
They raised they raised like$300,000 in 2017 on a WeFunder.
Uh and then they took that, likethe the like customer validation
of investors in like beingpassionate about this problem
(28:35):
and went and raised you know aseed round and and and and have
grown the business.
Uh there was an update recently,you know, they'd like just made
a they just passed one of thetri the trial milestones, right?
There, they've been they've beenbuilding, they've been able to
continue to build this business.
And it started by being able toengage the community, right?
(28:55):
Like um another another founderthat I I've met through WeFunder
is a company called Adam Limbs,right?
They they have like a DARPAgrant to build kind of AI uh
prosthetic limbs, right?
So like targeting veterans.
Uh uh you know, that that's athat takes a long time to build
(29:17):
that company.
But what what the founder ofAdam Limbs said is like you
know, go go lean go go lean intoyour weird, right?
You don't need to be everythingto everyone.
Go find the people that likelove and resonate emotionally
with what you're doing and turnthem into your investors, turn
them into your community.
If you can start there, you canexpand, right?
(29:39):
But like just go go find thepeople that believe in what
you're doing, right?
Whether it's because of you,Eric or Mark and what you're
doing and your track record, orjust because you've you're
you're solving a problem thatthere's you know, one half of
one percent of the world relatesto that problem on like a like a
fundamental visceral level,right?
SPEAKER_05 (30:02):
Those are the people that are in your community.
So once once the money's raisedand it's all under that SPV
special purpose vehicle, thenit's that's in an LLC.
Does it have like who who is therepresentation for that LLC?
SPEAKER_03 (30:19):
Um traditional, so uh it's it's interesting.
WeFunder is actually undergoinga pretty big evolution right
now.
Um really actually, you know,Mark, I met you through the the
Paragon uh or Janus slashParagon motorcycles raise.
Um since that race, we nowsupport Reg D, meaning
traditional uh angel investmentas well.
(30:42):
Um and with that change, we madea big change in terms of our
structure.
In the past, we requiredcompanies to have a lead
investor in their Reg CF race,and frankly, made it sell it,
made selling the platformharder.
But we basically said, okay, ifyou're gonna race from retail
investors, you need to have atleast one person with some like
some significant skin in thegame that's investing on the
(31:02):
same terms, it's gonna offerthose people representation on
the platform.
Um today that that's no longerrequired.
The founders can be the sign,the proxy designer for the for
for the SPD of We funder.
Um the reason we're doing thatis because it aligns with reg D
fundraising and how peopleoperate there.
Now, I we still really believein having a lead investor.
(31:24):
And if a company is trying toraise on you know what I view as
what we see as you know,out-of-touch terms, we'll
probably still say, hey, like ifyou we're gonna host this raise,
you need to bring in somebodywriting a significant check on
these terms just to like provethat there are real people out
there that want to invest.
Yeah.
But but um from a controlperspective, Eric, um, you know,
(31:48):
the the founder can be thesigner, the proxy signer for
that SPB.
SPEAKER_05 (31:53):
Sounds like a great odd great deal for a founder.
I mean, you have like that thathas no there's no it's not
voting stock, obviously.
SPEAKER_03 (32:01):
We we don't common stock raises on WeFunder.
So it is the the the thefounders that the investors are
investing in preferred sharesthat have preference over
common, but they're notdelegating rights to somebody
that might work against them.
Does that make sense?
Yeah, so it's non-votingpreferred stock.
SPEAKER_04 (32:22):
Yeah, most people don't realize that really
preferred stock, in my opinion,is not preferred.
But anyway, while I always getinto arguments because it
because it doesn't have votingrights, okay?
But it has like preferential forlike sales or whatever, right?
Yeah, but if most of the time itfunctions like debt more than it
(32:42):
does equity.
But anyway, we could have thatdiscussion.
SPEAKER_03 (32:44):
We we do that because we think that like most
angel investors are investing onpreferred, and so we think that
our angel investors, micro angelinvestors that we fund her
deserve the same right.
I I think you're right, Mark,that in most cases it's like not
actually gonna end up being thatmuch of an issue.
And you're right, if there waslike a liquidation of assets,
the preferred investors are justgetting, you know, the the that
(33:07):
that first.
And it does kind of functionlike that.
But really, what we're trying toavoid is uh uh a venture
investor or some big investorcoming in later and getting
preference over the you know theretail investors just because
they were small check investors.
SPEAKER_04 (33:22):
But let's go back to though to the legal form of the
entity that is raising capitalon WeFunder.
So let's uh uh you know I knowin our case we were a C Corp,
which makes it very easy becauseother entities can own um
ownership in a C Corp.
But if you had an S-corp, it'snot gonna work.
(33:44):
Is that not right?
SPEAKER_03 (33:45):
Yeah, you can't you cannot raise you cannot raise
via Reg C F as an S-corp.
SPEAKER_04 (33:49):
But you can as an LLC, though.
Is that right?
Yeah, you can as a BLC Corp.
SPEAKER_03 (33:54):
There are some complications as an LLC, right?
As an LLC, because because anSPV is an LLC, uh, try not to
because the entity that peopleare investing is an LLC, an LLC
raising or we funder doesn'toffer the same simplification uh
of the cap table that um yeahI've never been a C Corp does.
(34:15):
So you'd have to you'd have toissue K1s every year to all the
all of the investors, which ifyou have a very successful
raise, becomes a pretty big job.
Um it's our strong ref pref uhrecommendation to anyone trying
to raise more than like the 124klevel is you should either
convert to a C Corp or chooseyou can stay in a LLC and be
(34:37):
taxed as a as a corporation,right?
You just make a tax selection.
Um but that's if you're raisingequity, you really should do
that just because it creates alot of like room for error.
SPEAKER_04 (34:49):
I'm a big fan of C Corps anyway today.
I mean, first off, the tax well,the tax rates are lower than
individual tax rates.
That's a that's a big plus.
And if you do want to preserve,um, if you want to retain
earnings and you're not tryingto pay out a bunch of profits
along the way, you're trying togrow your business, C Corp's
just a better structure.
(35:10):
It's easier to retain.
Because the the the money thatan S-corp or LLC makes is a
pass-through entity.
Whether it you take it out ornot, it's taxed.
Because the company's individuallevel.
Because the company made theprofit.
Yeah, if the company makes$100,000, let's say, and you're
the sole owner of your LLC, youget the K1 that says I made
(35:33):
$100,000.
You might not have gotten any ofthat.
Because you've been putting itback in the business.
You've been putting it back inthe business.
So the way the IRS views that isyou made$100,000 and you
reinvested, you pay tax on the$100,000.
With an with a C Corp, you onlypay corporate tax based on what
you made, and the corporate taxrates are lower.
(35:54):
Like your individual tax rate ormine is going to be higher than
a corporate tax rate by fartoday.
It's what is it, like 21% orsomething?
It's low.
It's in the 20s.
It's in it's in the it's in the20s.
It's very low now compared toyour individual tax rate.
And so that's the reason.
It's just easier to retainearnings.
(36:14):
Plus, it's sort of the mostlegitimate legal form of
organization that gives you themost flexibility.
Is a C Corp like the oldest?
Yeah.
They're all all corps start outas a C Corp, and then you can
file an election to be taxed asa subchapter S.
They all start as a C Corp.
Even LLC.
No, LLC is a limited liabilitycompany.
(36:36):
That's a totally differententity.
Well, but I mean, like, what'sthe original corporate
structure?
SPEAKER_05 (36:40):
Corporation would be a C Corp.
C Corp.
I'm just thinking like back inthe day when all this stuff
really because we had that oneepisode we were, and this is
kind of cool, Reed, we weretalking about I was doing my
history stuff, but one of thebig reasons that the writers of
this book, AmericanEntrepreneur, gave for America
(37:01):
being so successful and in beingour strength that we are, is
because of our legal laws thatwe have related to corporations
and how individuals can set upentities and are protected.
That outsurvive them.
That have outsurvived them andall that versus Europe versus
(37:21):
Asia.
Like it's the way the Americanlegal system is set up is
allowed us to be the countrythat we are.
And I just wonder if it was CCorp, was the LG.
Yeah, that's the original.
You think so?
Yeah, oh, I know so.
Oh, you know that as a fact.
SPEAKER_04 (37:36):
Well, I know that that's that C Corp is the is the
highest level in the basic uhcorporation.
SPEAKER_05 (37:42):
But that doesn't mean it was the original.
I mean, like I'm gonna do somefact checking and bust you out
on LinkedIn.
SPEAKER_03 (37:48):
I don't, I don't, I don't know that I don't know
anything about this.
I'm um you got me Googling inthe background here to see if I
can sound smarter than you guys.
SPEAKER_04 (37:55):
But I They didn't necessarily call it a C Corp,
but it was a corporation.
Okay, that's fair.
Yeah.
But I I mean, I despise LLCs fora million reasons.
I mean, how do you deal with theidea that all members of the LLC
operating agreement have to signoff on any changes to it when
you've got a Wii Funder as partof your cap table?
SPEAKER_03 (38:16):
We're still we're still putting them into uh a
pool, right?
And so there's still a proxy, asingle proxy for them.
The real issue is around K1s andtaxes, right?
It's like we we actually chargean extra fee if you raise as an
LLC because we will we'll do theK1s for you, but it's a lot of
work every year.
(38:37):
Um and if you choose not to paythat fee, then you're gonna have
to do it yourself.
And if you raised, you know, theaverage the average investment
on WeFunder, the the mediainvestment is something like
$250.
The average investment's alittle bit over a thousand.
But like, you know, if you raisetwo million dollars, it's a
whole lot of K.
It's a lot of K1s, dude.
Yeah, yeah.
SPEAKER_01 (38:56):
And how does it what I mean?
SPEAKER_04 (38:58):
If you there were uh if you were a LLC and you paid
distributions out to yourowners, typically you try to do
that, at least to cover your taxobligations, in my experience
with any pass-through entity.
I always tried to pay out 40% atleast to cover tax.
How do you deal with these wefunder investors?
They're not going to get thosedistributions, or are they?
SPEAKER_03 (39:19):
I mean, anything that you you you basically would
treat the we funder investors asa single entity and then we
split it up for you.
So you would send you a singlecheck to we funders.
SPEAKER_05 (39:33):
No reason y'all charge an extra fee.
No kidding.
My gosh, can you imagine that'sbrutal?
I mean, we also do revenuerevenue share on we funder,
right?
SPEAKER_03 (39:40):
We do that as well.
I think that's a read out ofyour pocket.
I apologize.
I'm talking to what were yousaying?
But you can do a revenue shareon WeFunder, right?
Like so we cut it up, we do thatas well, right?
So you where you're you knowyou're saying you're earmarking
a percentage of revenuequarterly, annually, or whatever
the timescale is, and you'resending it back to WeFunder, and
then we're chopping it up intoyou know however many pieces uh
(40:03):
according to the size of theinvestment.
SPEAKER_05 (40:05):
That's interesting.
But yeah, yeah, so that's avalue for somebody to invest,
right?
SPEAKER_03 (40:10):
Like they're kind of participating in For a brick and
mortar business or something,right?
Like we we we that's not ourcore product, right?
Like our product is built isbuilt around C Corps raising
equity or future equity, right?
The most common instrument thatwe funder is a safe, followed by
preferred equity, followed by aconvertible note.
Um but we that there are thereare businesses out there where a
(40:33):
revenue share makes sense.
Um, you know, you got if you'vegot if you've got healthy
margins and you're not trying tolike scale to be a huge
business, but you just want to,you know, maybe you need to
raise a little bit of money tobuild out a storefront.
So rather than rather thantaking on debt or rather than
having new ownership, you youknow, you just build your
business model so that you know,four or five percent of that of
(40:55):
your revenue is gonna go towardpaying back these investors, uh,
you know, some multiple on whatthey invested, you know, 1.5x or
2x or something.
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SPEAKER_05 (41:18):
You mentioned something that kind of goes to
my next question.
I'm gonna make sure I get thisin.
I'm sorry I'm kind of hijackingthis entire podcast.
SPEAKER_04 (41:25):
You're not.
I mean, when you got hair thatlooks like yours, as good as
that is.
That's what I'm talking about.
You can uh you can take thewhole thing, man.
Thanks, bro.
SPEAKER_05 (41:33):
It's all yours.
I appreciate that.
So you said safe, like so, likelet's talk about valuation.
So if I want to raise, if I wantto go on a raise, like you can
do a safe, so I don't reallynecessarily have to say what a
valuation is.
People are just investing likeit's a safe.
SPEAKER_03 (41:54):
Raising on uncapped safe on WeFunder, I would really
advise against, particularly inthis market, right?
Like you don't you're just notseeing many uncapped safes.
You were back in 2021 when uhpeople were investing in
everything all you know withoutreservation.
Um but the most commoninstrument is a safe.
(42:15):
I most retail investors franklylike you know, look at the
valuation cap on the safe andthink you know, that's the the
um that's the the bottom part ofthe fraction um when they're
kind of thinking about theirinvestment, which is not
strictly accurate.
Um but yeah, you can raise onfuture equity.
Um the reason I don't I think anuncapped safe doesn't work is it
(42:38):
creates hesitancy among yourcommunity.
And on WeFunder, like we thinkyou should think of the WeFunder
investors.
There's a million investors onWeFunder, right?
They're a force multiplier, andtheir force multiplication is
going to be based totally on youkind of eliminating all of the
questions that might be top ofmind that might give them pause,
(42:59):
right?
And an uncapped safe,particularly when you're in a
marketplace raising an uncappedsafe next to a bunch of capped
safes.
Why would I why would I investin that much less certain um
outcome?
SPEAKER_04 (43:10):
Once you start talking about safe safes in
general, I think it implies asophistication level of an
investor that a$250 or$1,000investor probably doesn't have
to.
I mean, think about that.
They understand havingfractional ownership in this
thing.
SPEAKER_03 (43:29):
Yeah, you know, that they can.
There are real questions aroundthat.
But and I think that's um, youknow, investor education is a
big piece of what we think aboutall day long.
But though the the what I theplace I would push back there,
Mark, is also yeah, I thinkequity is obviously the most
understandable structure.
But the biggest upside, any dealon WeFund, the biggest the
(43:52):
biggest upside deals on WeFunderare all on sakes.
Right.
So the people that are coming toWeFund are like really looking
for interesting.
Like an economic upside, areinterested in those deals and
they're educating themselves.
Uh, and I think we funder as aplatform, probably like we
should probably do more workhelping to inform people.
SPEAKER_05 (44:12):
Um uh, you should have your own video podcast.
Yeah, you should have more videopodcasts.
SPEAKER_04 (44:20):
I know a source for this.
Let's talk about it offline.
Yeah, I mean, they do everythinghere.
This is unbelievable.
SPEAKER_05 (44:28):
I wanted to close this deal right now, man.
Right now.
But but on the so explain to ouraudience about Cap Safe, real
quick.
SPEAKER_03 (44:36):
I mean, uh, since you guys are new educate, like
Yeah, so the but the way Safe,first of all, sounds stands for
Simple Agreement for FutureEquity.
Uh it's been popularized overthe next last decade or so.
It came out of Silicon Valley asjust kind of a simple way for
companies to raise earlycapital.
(44:57):
Basically, what a safe is doingis um putting off the issuance
of shares and stock and networkand saying, hey, like my
company's too early to make anypromise, any like hard promise
about the value.
But what a safe is saying is I'mI'm making I'm basically giving
you an IOU for future shareswhen I issue them in exchange
(45:21):
for your capital right now.
When I talk about a valuationcap, it's saying uh basically
the implicit promise is when Iissue shares, it's very likely
that the value of my business isgoing to be well above this cap,
but your equity is gonna beissued at or below that cap.
And so if I if you raise amillion dollars on a the easiest
(45:44):
way to think there's pre- andpost-money safes, but the most
straightforward way to thinkabout them is a post-money safe.
So if you raised a milliondollars on a post-money safe,
meaning after the milliondollars is in the business, it's
valued at$10 million.
The uh when that safe convertson a future financing that's on
a$100 million valuation, maybeit's priced at that point, those
(46:08):
investors in that million dollarsafe will have 10% of the
business because they're theywill convert to equity at that
$10 million cap.
Yeah, or the business is sold.
At that point, you so your$10million, you know, your million
dollar investment is now worth$10 million if the$10 million,
if the$10 million cap is raisesprice at$100.
It's a little bit esoteric, butI think as long as you're
(46:30):
talking about post-money safes,it's pretty, pretty
straightforward.
The the working it out work iseasier.
You have to factor in dilutionand all these things.
But the reason safes are usedare these are companies that are
going to move very quickly andraise a lot of capital before
they're kind of establishing abaseline for their business,
right?
Like uh it's not if I've if I'vetaught if I've got 10 customers
(46:54):
in a market of a millioncustomers, my revenue today is
not an accurate representationof what my business the value my
business model can create.
SPEAKER_05 (47:03):
Yeah.
Makes sense.
And then you also do convertiblenote.
Did you say that earlier?
SPEAKER_03 (47:08):
Yeah.
Which is similar, it's an olderinstrument that has an element
of debt involved, right?
It's like if the if if the ifthe company fails and doesn't
raise capital, additionalcapital, instead of going poof,
the investors have a have a uhthere's a debt element where
they could be paid back uh withinterest.
SPEAKER_05 (47:27):
Yeah, I get I I guess it makes I understand
convertible not.
I'm just trying to think aboutit in a we funder scenario.
It gets a little confusing onhow all those but it's just all
the same principle because itends up being just one investor,
basically.
It's just a fractional honest,right?
SPEAKER_03 (47:43):
It's just smaller shares, right?
So, you know, you raise amillion bucks and I've got a
hundred dollars in it.
SPEAKER_04 (47:48):
Let me ask one more question, though.
I think it's important.
Let's say I'm an investor in WiiFunder and I buy$1,000 worth of
ownership and whatever it is.
How can I ever get that moneyback if that company is not sold
externally?
Is there any liquidity to it atall?
Ever?
SPEAKER_03 (48:08):
There's a that's a great question.
Um, because I think it's thebiggest, it's the biggest
problem facing our industry,liquidity.
There is not a formalizedsecondary market for private
private investments anywhere.
Right.
I mean, we we facilitatesecondary transactions pretty
regularly for individualinvestors.
You know, they find they findsomebody that they're gonna sell
(48:29):
their shares to.
But the reality is that umthere's no there's not good
liquidity.
And if you're selling aninvestment in the company on
WeFunder to somebody else,you're probably selling it at a
huge discount.
Right?
The expectation of an investmentlike this should be I'm never,
I'm either gonna, you know,either there's some sort of you
know, dividend, like a revenueshare or a profit share coming
(48:51):
back to me, or I'm probablynever gonna see this again.
Um which is why, you know, thisis why the venture model kind of
is built on a lot, making a lotof high-risk bets, and they're
looking for big returns to eachof those bets.
Um, but we I mean we've seenliquidity, like we saw the the
first company to raise aWeFunder uh did an IPO six
(49:12):
months ago.
It's called Beta Bionics, it's abiotech company.
We're starting to see that.
I mean, these are real issuesthat the SEC has to deal with,
right?
In in helping companies gopublic uh more easily.
You know, back in the 90s,people went public with a$50
million valuation.
Now, you know, Stripe is worthbillions and has no plans to go
public.
(49:32):
Um you know, liquidity is is aquestion.
My the reason I work in thespace is because I think that I
think that problem will besolved.
Um, but it it it's a it is anissue that there's not um
there's not a you know astraightforward solution for
right now.
SPEAKER_05 (49:48):
Sure.
So about time, what I wanted tomake sure we do, right?
We've been talking like, okay,our listeners, you're small
business, you need to raisecapital.
We've talked about a lot ofcomplicated scenarios, honestly.
Sure.
But to but what I'm but I thinkthat give you the last couple
minutes here, Reed, to becausewhat we funders value that
(50:10):
you're providing for these foundthese founders is to simplify
this process, right?
And to help guide in like youknow what I'm saying?
Like, I think that that's Idon't want I want to make sure
that the the listenersunderstand that value after this
complicated.
SPEAKER_03 (50:24):
I appreciate you saying that, Eric, because I I I
kind of wanted to get thereearlier too, and I you know, I I
get lost in my own thoughts.
Um like the way that if I'm afounder raising state, so
weFunders changing as aplatform.
Traditionally, we've onlysupported Reg C F.
Like I said, uh Mark, we nowsupport Reg D fundraising as
(50:46):
well.
And so the reason we've donethat is pretty we really dislike
this this kind of there was akind of a split in fundraising.
People were like, I'm raisingvia reg D or I'm raising via Reg
C F.
I don't like it shouldn't matterwhat regulation you're raising
under, right?
It should matter who like thethe capital that you're raising
(51:07):
is the important thing.
Uh there are different benefitsto different capital, right?
Raising from venture capital,they prompt their promises a
Rolodex and connections andstuff.
Your community is promisingloyalty and a street team and
friendly, uh, you know, kind offriendly money, basically.
Um, if I'm a founder approachingthis today, what I would be
(51:28):
doing is setting up a page onWeFunder and starting to build
my community there.
And likely I'm starting myfundraise, closing a few bigger
checks via Reg D, via likebigger angel checks, things that
only accredited investors caninvest to kind of price out my
deal.
And then only when I'm done withthat, I transition to Reg C F.
(51:49):
And it's the what Reg C F isoffering is the ability to for
you and your supporters to helppromote that you're raising
capital and in empowering you toreach a bigger audience of
potential investors.
Um and and that that's it.
It's like it's just anotheroption to stack in there
alongside um a lot in your inyour capital raise.
(52:13):
Um, you know, I I we're gonnastart seeing companies that
raise, you know, they mightraise a million dollars on
WeFunder, but maybe they raise200,000 from a from retail
investors, right?
So they raise 800,000 from angelinvestors and venture
capitalists.
They're using WeFunders checkoutflow to do that.
And the reason they're doingthat is basically it's
simplifying, it's giving you asingle point of truth to point
(52:34):
all of these investors.
It's giving you a platform tostorytell about your company.
SPEAKER_04 (52:39):
Yeah, I mean, that's exactly the scenario we had at
Paragon.
I mean, if you look at themillions of dollars we've raised
from accredited investors tostart with, it sort of validated
the whole thing.
And then you go to the WeFunderplatform and go, look, this is
what's happened, right?
SPEAKER_05 (52:55):
I mean, what I would say would be the nice I'm sorry,
but you guys started today withthat's sorry.
Well, just real quick, what I'dsay it'd be nice though is if
you started with thoseaccredited investors and we were
being pointed to the WeFunderenvironment, and that's where we
(53:16):
were learning and reading andand and kind of you know uh
going into, then when you moveto the crowd, the the community
side, yeah, you're still yeah,your all-accredited investors
would have been able, would havehad an experience with WeFinder
that could have maybe helped youparticipate in the world.
No question, right?
Yeah, absolutely.
SPEAKER_03 (53:34):
Because this is exactly yeah, this is exactly we
just launched that ability inFebruary.
So when Paradon was setting up,we could not support that.
We actually haven't even liketold we haven't even promoted it
publicly.
We're gonna we're we're planningto tell everyone on April 2nd.
So you guys are hearing thisearly that you cannot do this on
WeFunder.
SPEAKER_05 (53:54):
But that's exactly we just be just we were like the
first at bat on Big Talk aboutsmall because they break a media
network, right?
SPEAKER_04 (54:02):
Breaking news here before April 2nd, though.
Well, what's next Thursday?
I don't know.
What is next Thursday?
SPEAKER_05 (54:11):
April 3rd or something.
But what what were your well,yeah, we got you.
What were what were your lastcomments though?
SPEAKER_03 (54:18):
Yeah, yeah, I apologize here.
Um what what I was saying isbasically like Eric, you you you
hit the nail on the head there,right?
It's like we've had this falseseparation, and what we want to
create is a place where itdoesn't matter what regulation
you're raising under, it's thepeople that are passionate about
you.
When you you're good, you're thethe bigger big checks are gonna
(54:41):
come in first and validate this,and you're gonna help build
momentum there.
And then you open up, you know,maybe once a year you open up
for the little checks, right?
But it's a it's a single placeto talk about building your
business.
Um, and that's that's that's theimportant thing, is it's not
about reg CF versus Reg D versusventure capital.
(55:01):
If you're building a communitythat's gonna back you, uh it
shouldn't matter if I if you'rerich or poor, right?
It just matters that you'repassionate about the problem.
And so if you're storytellingthere, that you're creating
leverage uh and creating thepotential of of investment.
Um that's what that's whatthat's what we think everyone
should be able to do.
SPEAKER_05 (55:22):
Creating the market.
That's it, man.
Well, hey, that's a good placeto end.
Reed, how do how do people get ahold of WeFunder?
I mean, what are they?
Wefunder.com.
SPEAKER_03 (55:31):
Go to WeFunder.com forward slash raise and start
setting up company.
Um it's self-service.
Arc team will reach out.
But if anybody on this podcastis interested, feel free to
email me at um read r-e-a-d atwefunder.com.
I'm happy to chat with anybodyand help them understand how to
do this well.
Um and yeah, I mean, that thatthat's it.
(55:52):
We're we're we're always here tohelp.
SPEAKER_04 (55:54):
Well, I I can say that Red's been great to deal
with, and he's always veryhelpful and not condescending
and and and um treats everybodywell.
SPEAKER_05 (56:04):
So well, it's been nice that that you spent time
with us and helped help ouraudience better understand
what's going on.
Really appreciate that.
Great episode.
SPEAKER_03 (56:12):
I appreciate it.
SPEAKER_05 (56:13):
Um thanks for the time.
Well, until next time, this hasbeen another episode of Big Talk
About Small Businesses.com.
SPEAKER_04 (56:26):
Thank you, Reid.
See ya, Reid.
SPEAKER_02 (56:35):
Thanks for tuning in to this episode of Big Talk
About Small Business.
If you have any questions orideas for upcoming shows, be
sure to head over to ourwebsite,
www.bigtalkaboutsmallbusiness.com,and click on the Ask the Host
button for the chance to haveyour questions answered on the
show.
Stay connected with us onLinkedIn at Big Talk About Small
(56:56):
Business.
And be sure to head over to ourwebsite to read articles, browse
episodes, and ask questionsabout upcoming shows.
Some of the companies that we're working
with are uh raising, like Isaid, raising venture capital
and using our platform as moreof like a community engagement
and marketing ploy thananything, right?
It's like uh missionally or likethey just want they want their
customers to be able to invest,right?
And this is the the mechanismthat allows them to do that.
SPEAKER_05 (00:25):
We kick it off the same way every time.
Okay.
Because we're boring as hell.
This is another episode of thatbig talk about small business.
Businesses.
SPEAKER_04 (00:37):
Different every time, my friend.
It is.
We we like to mix it up.
So today we're with Reezell, andReed is again it sounded like
you said Rezel.
Reed Azell.
Is that not the properpronunciation?
SPEAKER_03 (00:50):
You don't call it Zell actually, but it it's easy
to drop the E.
You cut it.
It's easy to sound a little bitintoxicated saying my name.
I think you have the linestogether.
SPEAKER_04 (00:59):
Reed Zell.
Read Re Reed Zell.
No, we've got uh Reed Azell herewith it.
Read Azelle.
And I got acquainted with Reedfirst through the WeFunder.com
platform.
And that's why we wanted to gethim on the show today because
that is a crowd, what do youcall that?
A crowdfunding platform?
(01:21):
It's not exactly that.
SPEAKER_03 (01:22):
Yeah, we like to avoid using the word
crowdfunding.
We we call it raising acommunity round.
Um I think you know,crowdfunding sounds like
something that, you know, itsounds like a Kickstarter, it
sounds like something you'redoing.
Yeah.
You know, we really like to leaninto the the the idea that we're
we're opening up angel investingto anyone, right?
It community around hill alignsis more more with uh a
(01:44):
traditional venture round orother types of equity funders.
SPEAKER_04 (01:48):
So could they with the community round funding
platform of WeFunder.com, like Isaid, um I'm just kidding, Reed.
Um, but it's really beeninteresting for me.
I knew nothing about Wii Fundermonths ago when I first reached
out to them.
I was um turned on to them byLuke Regnier.
(02:08):
He's been another guest on ourshow.
And Luke suggested that with oneof the companies that we're both
involved with as owners, that umwe take a look at WeFunder as a
way of opening up the equity toa larger group of people,
particularly this very loyalcustomer base that we have.
(02:30):
Yeah.
And uh, you know, I'm not gonnasay it's been easy necessarily
in every way, but it it has beensuccessful, and we have raised a
significant amount of equitycapital from a completely new
group of investors because ofWeFunder.
So, Reed, tell everybody alittle bit um first um uh about
(02:53):
yourself, and then I want to getinto WeFunder, and you can tell
us all how it works and how thatwould be helpful to many small
businesses out there.
SPEAKER_03 (03:01):
Yeah, I mean, um I'm excited to be here.
Thank you.
Obviously, you guys you guys arefocused on kind of the
practicalities of buildingfunding, running small business.
Um that's something that one onepart of that is something I
spent a lot of time thinkingabout.
Um my name's Reedy Zell, like Ilike we said at the top.
(03:21):
I'm based in Nashville,Tennessee.
It's where I was born andraised.
Um WeFunders are based in SanFrancisco, but I found my way to
WeFunder kind of by a circuitousroute.
I uh when I I left home andspent most of my 20s living in
other countries.
Um I was a consultant, I was ateacher, I did I thought that
(03:43):
for a while I was gonna be anacademic.
Uh once I got into that,realized that that was really
not what I wanted to do.
And I not in the financialservices industry at all.
Uh most of my 20s just been inin Egypt, Saudi Arabia, and
Qatar.
Um, I when I came back, I whatI've always been interested,
(04:03):
though, is kind of interested inthose these kind of big problems
creating kind of opening up moreaccess, right?
When I first went to the MiddleEast, it was about helping
people understand more aboutthat part of the world.
As I got older, I realized thatI could have more impact back
home.
Uh that's what brought me backto Nashville.
Um, and I really fell intoworking at Wii Funder um kind of
(04:27):
accidentally.
I founded a nonprofit when Imoved back home to the country,
uh, back back to Tennessee,piloting a social impact uh
experiment, piloting aguaranteed basic income in a in
a specific neighborhood inNashville, which is back kind of
six or seven years ago now.
Um and I met uh the president ofWeFunder who lives in Nashville
(04:50):
as well, through that.
Um kind of my experiencefundraising for that initiative
and my experience trying tofigure out how to do this thing
from with without much precedentwas kind of what led into me
working at WeFunder.
Um it was also a realizationthat I didn't want to stay in
the nonprofit space.
Um but really at WeFunder, whatI do now is I help founders
(05:12):
raise capital.
Uh I helped them understand wasa new way to raise money, uh,
different than traditional bankdebt or you know, venture
funding.
I think WeFunder kind of canslide up and down the scale
closer to either one of those,but generally fits in the
middle.
Uh, and engaging communities offolks uh to be investors in
(05:34):
their business.
Uh, we talk about letting yourfans and community invest in
your company.
Um uh and I I think it's a it'sa can be a really powerful
mechanism.
SPEAKER_05 (05:47):
Hey, Ray, going back to the very first comment you
made when Mark uh incorrectlycalled you a crowdfunding
platform, which I apologizeabout that.
Like obviously everybody knowsthat except Mark.
Mispronounce my name.
Yeah, right.
Mispronounce your name.
Got your what you guys docompletely wrong.
SPEAKER_03 (06:10):
I mean, uh I mean it is what we do, right?
Fundamentally, fundamentally,what we're doing is letting any
like so to take even a step backfrom crowdfunding and what
WeFunder does today, right?
WeFunder was started by a couplefolks who were young
entrepreneurs and they felt itwas silly that they couldn't
invest in their friends'businesses.
(06:31):
Right?
They're not rich people.
They're they're people that areyou know working alongside
founders every day, and theywanted to be able to write a
$1,000, a$5,000, you know, asmall check into their friends'
businesses to support them.
Uh it turned out that was illthat was illegal.
Um, you know, under intraditional uh uh under the SEC
(06:52):
regulations, I think it was 1933until 2016, it was illegal for
someone who was unaccredited,meaning um they had a net worth
of under a million dollars or anincome of under a quarter
million dollars to invest in aprivate company.
Um the founders of WeFunderWeFunder actually started as a
(07:15):
petition to uh ask Congress toinclude in uh in law the ability
for regular folks to invest inprivate businesses.
Um and that's how we fundersstarted.
Um what year was that?
The law was called the Jobs Act.
It was passed in, I think itwas, you know, developed in
(07:35):
2012, passed in 2013.
WeFunder went through YCombinator in San Francisco in
2013.
It then took the SEC about threeand a half years to put rules
around this.
So regulation crowdfunding,which is what the regulation
regulators call this, has beenlegal since 2016.
And what it allows is anyone toinvest uh small amounts in in a
(07:59):
company.
Now, there's been a little bitof a circuitous route since
then.
I would say the way that theregulations worked initially
wasn't all that great.
They're iterating on the onthis.
Um, but you know, WeFunderbasically started as a uh on the
belief that it's un-American,that you can't, you know, you
(08:20):
can go to Las Vegas and gambleyour money.
Why can't you invest in a riskystartup?
SPEAKER_05 (08:27):
So and I guess the way that it all works is like it
ends up, I mean, are all thepeople that are investing, are
they kind of falling underneatha single, like is it like a
single entity that they'rebasically Today?
SPEAKER_03 (08:40):
Yes.
So in the way that it wasoriginal, when I say that the
regulations didn't work all thatwell at first, um today, if
you're investing on the WeFunderplatform, in 99 out of 100
cases, you're investing into anentity called a special purpose
vehicle, which uh in startupinvesting is a very established
term, but most people don't knowwhat that means.
(09:03):
Basically, it just means thatyou're actually not investing
directly in the company, you'reinvesting in an LLC that is then
pooling that the capital of alot of people investing directly
to the company.
And so what that means for thecompany is that rather than
adding a thousand investors totheir cap table, they're they're
adding one.
There are a thousand peoplerepresented in their cap table
(09:23):
by that LLC, which is veryimportant for companies that
want to raise multiple rounds ofcapital.
You can't having a thousandpeople on your cap table if
you're a really early stagecompany, um, and you want to
raise, for instance, venturecapital, is going to be a very
big red flag.
Um, but yeah, so it's it's asingle line in your cap table.
Anybody can invest.
(09:43):
And the ways that that works,it's it's pretty various, right?
Um, some of the companies thatwe're working with are uh
raising, like I said, raisingventure capital and using our
platform is more of like acommunity engagement and
marketing ploy than anything,right?
It's like uh missionally or likethey just want they want their
(10:04):
customers to be able to invest,right?
And this is the mechanism thatallows them to do that.
Um one of my favorite races ofall time, though, is a is a wine
bar that's about four blocksfrom my house in Nashville
called Bad Idea.
Uh uh the the the guy whostarted it was uh um you know he
(10:25):
was a Somolier in fine diningrestaurants in Nashville for a
decade.
Coming out of the pandemic, hewanted to, you know, run his own
place.
And he he said what he said ishe'd spent a decade convincing,
you know, telling people thatstarting a wine bar in Nashville
was a bad idea.
That's where the name came from.
Um but you know, I I pitched himon, you know, rather than going
(10:46):
to a restaurant group andsharing 50% ownership with a
restaurant group that would thenwant to have a pretty
significant say in terms of howhe ran his business and maybe
even push it away from you knowbeing a wine-focused restaurant
to something that traditionallyworks better in our market to be
you know a more you knowfood-focused restaurant where
the margins are a little bitbetter or but where the where
(11:09):
there's a more of a marginsaren't better, but there's a
more proof and mall.
He decided to raise on weedfunder.
He raised three quarters of amillion bucks on WeFunder.
You know, he had a couplebigger, he had a couple of
backers lined up before, but heraised that capital from I think
around 150 people.
You know, some of those werepeople in the neighborhood.
Uh, some of them were people, alot of them were people that had
(11:31):
known him from uh coming intoand in into restaurants that
he'd worked in over the over theyears.
Some of them were you knowfellow restaurant, uh
restaurant, you know,hospitality workers that just
wanted to support him, right?
And people, you know, peoplesupported him at um you know
$100,000 and uh um and$100.
(11:53):
Sorry for the I don't know whatjust popped up in my camera.
Yeah, what?
Um but uh you know that I that'sthat's not a venture capital
raise.
It was about engaging peoplethat wanted to see this thing
happen and that believed in him.
And ultimately, that's what Ithink early stage capital is
about.
Uh, even if you're talking to aventure investor, right?
(12:15):
They're investing in the team.
Who knows the team better if youdon't know venture capitalists
than the people that know thepeople that know you personally?
SPEAKER_04 (12:22):
Yeah, I think the Janice um capital raise or
Paragon Motorcycles Inc.
Um reflects that too.
I mean, we just have people whothey like our product or they
have dealt with the company as acustomer in some way and they
and they like the company.
And it's not necessarily apurely rational decision like a
(12:43):
typical, you know, privateequity or venture capital
investor would make, where it'slike, okay, well, I need to get
a 10x return in the next threeyears.
You know, it's it's much moreemotional than it is necessarily
logical.
SPEAKER_03 (13:00):
I well, first of all, I would argue that a lot of
venture capital investments aremore emotional than venture
capitalists would would like toadmit, right?
Like people wouldn't there's alot of gut in that industry as
well, right?
Sure.
And there's a reason why venturecapital tends to, you know, is
is really weighted toward peoplethat look like venture
capitalists, meaning, you know,white male founders that went to
(13:23):
really great colleges, right?
It's like that's not that's notbecause of that's because of
just everyone believes in thepeople that look like them
because they know that they didthey did a thing, right?
I I I don't I think that's akind of a uh on a um a very
understandable bias of thatindustry.
Not that it's good or you know,I don't I I think that you could
(13:47):
probably argue that it's a it'sa very bad thing, that that um
kind of inequality in thedistribution of capital.
But um but yeah, you're a weefunder, you're tapping into a
different kind of approach toinvesting.
Doesn't mean that you're notgonna see a return, but a
venture capitalist is you knowhas to invest in a company that
(14:10):
it they they're investing in thecompanies that they think have
the most likelihood to returntheir fund, right?
That the logic of venturecapital is that every company
that I invest in needs to havethe potential to a thousand X.
Right?
There are a lot of businessesout there that have the
potential to 10x.
And I don't need to, and I don'tneed if I'm not a venture
(14:31):
capitalist, I don't need to, youknow, I can I can invest in
those businesses.
Um and so it open it kind ofopens up the logic a little bit,
right?
Invest in passion because youknow maybe you're just investing
because you like the person, butalso maybe you because you're
closer to in in Paragon's case,right?
Like you know the motorcycleindustry, you see the potential
(14:53):
of small displacementmotorcycles.
Venture capitalists aren't goingto invest in that because it's
definitionally a niche market.
But like if you've seen thatgrow and you believe in this
this company, go ahead andinvest.
Um, and we think that there's alot of knowledge and a lot of
like potential returns ininvestments like that.
SPEAKER_05 (15:13):
What what so tell us a bit more or read on the
mechanics here?
Like, I guess first of all, doesit does it matter what stage a
company is to get involved to toengage with WeFunder?
SPEAKER_03 (15:27):
No.
Um now it matters what stage acompany is to how much money
they could raise, right?
Um and I think that that's oneof the biggest pitfalls that we
see is you know, people come tous and they're like, hey, we
want, you know, the most you canraise uh in under the regulation
that we traditionally work underis uh called you know regulation
(15:48):
crowdfunding, uh, is$5 billion.
Now, to do that, you needaudited financials.
There's some friction there tobe able to do that.
But most of the companies that Italk to shouldn't shouldn't set
out to raise$5 billion.
What they should set out to dois engage a community, and they
should set out to raise thecapital that that community can
support.
And then they should use the WiiFunder platform to expand that
(16:10):
community, right?
What the power of regulationcrowdfunding does is allow you
to accept anybody as an investorand then you two publicly
solicit for investment, whichyou can't do in a traditional
fundraiser.
Okay.
That public solicitation is insome ways helped by WeFunder,
but it could also be, you know,um to email, you know, getting
your friends to email theirfriends.
(16:32):
Yeah.
Uh, or sure, you know, gettinggetting on a podcast and talking
about the fact that you'reraising capital, right?
You can kind of expand yoursurface area of investors that
way.
And so I I think one of thebiggest mistakes the companies
make is they think, okay, I needI need X amount of dollars in
the next two years.
That's what I want to raise onWee Fund or today.
Really, what you should bethinking about is okay, I've got
(16:55):
X amount, I've got a communityof this size today.
And I think that I canreasonably expand that community
through this process from X toyou know 2X or 3X and estimate
that the amount of money thatthat could represent.
And may it, and the mosteffective companies that we see
do this are doing it repeatedly,right?
(17:16):
Like you build a community overtime that stays engaged and sees
your growth and follows yourstory, and that's where this
becomes incredible, verypowerful, right?
Um it's not I'm gonna raise$2million in the next two months
from a bunch of hundred dollarinvestors.
It's I'm gonna raise maybe it's$200,000, maybe it's$500,000,
(17:36):
maybe it's a million, that I'mgonna then continue to engage
them and build in in kind of uhbring them into the process of
building the company.
And then it's not just aboutmoney, it's about um, you know,
community engagement.
It's about having a you know abuilt-in street marketing team
of people that are gonna go outand try to help you make
(17:57):
connections.
And if you hit some milestones,those same investors are will
are likely to invest againbecause on paper you've
increased the value of the city.
SPEAKER_04 (18:05):
That's the key right there.
It's it's performing, and thenyou make believers out of them,
and then they become so you cando another round?
SPEAKER_05 (18:12):
Yeah.
How many rounds can you do?
You can do it every year.
As much as once a year,basically.
You can do once one time perannual per year.
SPEAKER_03 (18:21):
You could you could you could launch multiple raises
in a year.
The the caps in terms of howmuch capital you can raise are
set in a 12-month time span.
Okay.
So they kind of that numberresets.
Uh so explain that.
If you're raising a small yeah,so the way the regulations are
set up uh for regulationcrowdfunding, right?
(18:44):
There are three kind of tiers ofa reg CF raise.
And so uh and there's differenta different set of um financial
disclosures that are arenecessary uh for those three
different levels.
You can raise up to$124,000.
Basically, you the kind of thebiggest downside of Reg C F or
(19:06):
friction point around Reg C F uhis you are publicly disclosing
your financial statements.
But under$124, they are justself-compiled.
Up to$1.24 million, you have toget a CPA to review them and say
basically, yeah, this makessense.
And then above$1.24 million, youhave to get those financials
audited, up to$5 million.
(19:27):
And so raising repeatedly doescreate you, you have to
basically build into yourbusiness that you're gonna keep
your books clean and and um uhget these, uh get a review or an
audit every year.
Um, you know, the first timepeople do that, it tends to be
very painful, but then if youkeep things in order from there,
it it becomes less painful.
(19:49):
But but yeah, I mean you couldraise repeatedly.
Um the way that we think thisshould be done is kind of it's
not about Reg C F, it's notabout the regulation, it's about
the philosophy of capital.
It's this is a this is adifferent way of a different
source of capital.
Like I said, bank debt, venturecapital, traditional angel
(20:10):
investors, all those are peoplethat you might go to.
Your community is just anotheramong those, and we should be
stacking that that alongside allthose different sources of
capital.
Um but yeah, the the valuethough is the public promotion
of this, right?
So I you know I'm biased, but Ithink a way that a company
should do this is if you'regonna raise money, set up an
(20:33):
account on WeFunder, startbuilding a community, start
communicating with them, run afundraise, uh, continue to
communicate with them, updatethem, and then maybe in 12
months you do another fundraise,right?
It's it's it's not you're you'rebuilding this kind of muscle of
communicating with yourcommunity into the operation of
your business.
And what it does is createoptions for you, right?
(20:56):
If you are a company that's onthe venture ladder uh and you
haven't hit the milestones in,you know, at the end of 2026
that you want it to, yourcustomers are probably like, if
they like what you're doing, aregonna be ready to invest to help
you get to those milestones sothat you're ready for your next
venture raise.
There are a lot of companies outthere that aren't on that
venture ladder, right?
(21:18):
Um, rather than taking on debt,what this is is basically
friendly capital from the, inParagon's case, motorcycle
owners in bad ideas case, wideenthusiasts, right?
That um are you know tradingaccess and you know, they want
to be in the in the process, butthey're willing to help you grow
the business.
SPEAKER_05 (21:36):
So it's like somebody should look at this as
like, I went public and I'm nowI'm doing shareholder meetings,
I'm taking care of you.
You want you don't want yourshareholders to start selling
stock.
SPEAKER_04 (21:46):
Yeah, I think the thing communication.
Yeah, it's a good discipline,probably to have just in your
business in general.
You're not commingling yourpersonal stuff with it, because
that would be wrong.
You've got to have good account.
Accounting, right?
And you've got to have goodinformation sharing with your
owners.
Those are all sort of gooddisciplines.
SPEAKER_05 (22:07):
Hey, Reed, when you're can you hear Mark
chomping on his chewing gum whenyou're talking?
Because I mean, I'm sure.
Okay, our audience.
Sorry about that audience thatMark is continually smacked in
the microphone, but I'll getback to the business part of it.
SPEAKER_04 (22:22):
I got the gum from you.
SPEAKER_05 (22:25):
I just didn't know you were going to be like
putting your face against themic and like smacking it.
Should I do it again?
Yeah.
I can hear it now after moon.
It's disgusting, isn't it?
Oh, no worries.
SPEAKER_04 (22:38):
Anyway, I just want my lips open for that thing.
SPEAKER_05 (22:41):
You know what I do like, Reed, but one thing you're
talking about.
So I get extremely irritated.
I'm like a really bad CapitalRanger with because I get so
irritated.
And you made a really goodcomment that I wouldn't point
out to the audience.
My irritation comes whenever I'msitting here, I got this
company.
Take podcast videos, forexample.
(23:02):
We know podcasting's growinglike crazy.
It's actually outperformingradio now.
There's more listeners onpodcasts and our radio for the
first time ever.
So it's overcome a major mediaoutlet.
But that's that's just thepodcast part.
Then you got video.
YouTube's the biggest mediacompany under the sun.
And it's all video.
All social media is using video.
(23:23):
And then I go to uh, and so wedo both, right?
Yep.
At our company called PodcastVideos.
I go your firm does again, Eric.
Podcasts and videos.
That sounds like a good thing.
Right, yeah.
I mean, like obvious.
But you go to investors andthey're like, man, I don't know.
I don't know.
And you have to explain to them17 hours worth of explanation.
(23:45):
They want to see a bunch ofstupid data points, and they
still leave.
And like you mentioned before,it's like, how freaking obvious
is this in is this business thatwe're in that you can't even get
past the thought, and but you'repoor money some of the dumbest
things I've ever seen my entirelife.
SPEAKER_03 (24:02):
But show them show them, don't tell them.
Right, exactly.
Right?
You shouldn't, you should likethe biggest mistake that I
think, you know, I've neverraised equity capital.
I've helped a lot of peopledoing it.
So, like, you know, I I don't Idon't claim to be an expert
here.
Like I said, I I ended up inthis kind of by accident.
I've loved my job and I lovehelping founders raise capital.
But the state the mistake that alot of first-time early founders
(24:26):
make is like they're they'reheads down in the business and
then they decide they need toraise money, and that's when
they start trying to talk toinvestors, right?
Where what you should have beendoing is telling investors about
all the things you're doingheads down in the business for
the past six to 12 months.
Because then you don't need tospend 17 hours, right?
(24:46):
You've built that you've gottenbuy-in.
Not every investor is yourinvestor, and the ones that are
your investor will have stoppedfollowing your updates, right?
And so the people that are thereare the ones that are there for
you.
SPEAKER_05 (24:59):
Well, the one the the big point I was going to
make, though, was as youmentioned, motorcycle
enthusiasts investing inmotorcycles, wine enthusiasts
investing in the wine business,people that like podcasting
investing in podcast videos,people that are social media
video creators investing in acompany because they know they
(25:19):
understand, they understand thegoddamn market, and they don't
need a bunch of freaking othertypes of objective leverage
going on.
I'm like, I'm a wine enthusiast.
I really appreciate wine.
I can see why people would cometo this place.
Sure.
You're a great business, youseem like a good person.
Yeah, you've done this before.
Here's 250 bucks, here's$5,000,whatever.
(25:42):
That's that community thing thatyou're talking about.
That's when you said that, thatkind of gave me a little bit of
a breath of fresh air thatthere's a different way for a
founder to capitalize theirbusiness with a community, like
you're saying, that can supportthem.
SPEAKER_04 (25:58):
Yeah.
And and the other thing is thatthey, like Reed said, I think
early on, is they're notnecessarily going to try to
control your business and missand and take you off the rails,
which we all know.
I mean, I call it the goldenrule.
He or she has the gold rules.
Yeah.
And of course, you and I bothtalked about that.
So many founders, they're stuckin this ridiculous model of I
(26:20):
come up with an idea and then Igo out and raise and I do my
business plan and then I goraise outside equity capital to
investors who immediately nowcontrol my business.
So I wanted to be self-employed,now I'm not self-employed.
SPEAKER_05 (26:33):
Yeah, you're you're in a very risky employment.
You basically quadrupled yourrisk and you're still employed.
SPEAKER_04 (26:41):
I think the other thing too is it makes it easy
for somebody like yourself.
Let's just say as an example, ifyou wanted to take podcast
videos onto WeFunder, it givesthem a chance to know a little
bit about you and your successas a business builder and
entrepreneur and exit and youknow, and successful exit guy
(27:04):
without having to do thatyourself in a real, you know,
you're kind of self-conscious.
Like you wouldn't go to somebodyand brag and go, hey, you know,
I've done that.
But if they see the story rightthere, yeah, they can read that
and they know a little bit aboutyou now.
And it, I think it's going tobuild more trust.
Yeah.
You know, that I totally agree.
SPEAKER_03 (27:25):
I think it's like it's it's a really big miss.
But it's it's also it doesn'thave to be either or, right?
Like we see companies raise ourWeFunder, and it's actually it
becomes the proof point to thebigger investors, right?
It's like a story that we'vetold for a long time.
This is before my time atWeFunder, but it was a company
called Um I started to tell thestory, and now I'm getting the
(27:47):
name of the company.
Um they were they were workingon a solution for just to to um
to solve uh cure cancer in dogs,right?
They went through, you know,they're they're trying to raise
venture money, but this is likea big problem.
And they were talking toinvestors, and um, and the
investors were like, hey, yeah,we don't really see the market
here.
Like, who's gonna spend you know$10,000 to on a treatment for
(28:10):
their dog?
They came together and theyraised exactly people people
that like love their dogs willwill do that.
They raised they raised like$300,000 in 2017 on a WeFunder.
Uh and then they took that, likethe the like customer validation
of investors in like beingpassionate about this problem
(28:35):
and went and raised you know aseed round and and and and have
grown the business.
Uh there was an update recently,you know, they'd like just made
a they just passed one of thetri the trial milestones, right?
There, they've been they've beenbuilding, they've been able to
continue to build this business.
And it started by being able toengage the community, right?
(28:55):
Like um another another founderthat I I've met through WeFunder
is a company called Adam Limbs,right?
They they have like a DARPAgrant to build kind of AI uh
prosthetic limbs, right?
So like targeting veterans.
Uh uh you know, that that's athat takes a long time to build
(29:17):
that company.
But what what the founder ofAdam Limbs said is like you
know, go go lean go go lean intoyour weird, right?
You don't need to be everythingto everyone.
Go find the people that likelove and resonate emotionally
with what you're doing and turnthem into your investors, turn
them into your community.
If you can start there, you canexpand, right?
(29:39):
But like just go go find thepeople that believe in what
you're doing, right?
Whether it's because of you,Eric or Mark and what you're
doing and your track record, orjust because you've you're
you're solving a problem thatthere's you know, one half of
one percent of the world relatesto that problem on like a like a
fundamental visceral level,right?
SPEAKER_05 (30:02):
Those are the people that are in your community.
So once once the money's raisedand it's all under that SPV
special purpose vehicle, thenit's that's in an LLC.
Does it have like who who is therepresentation for that LLC?
SPEAKER_03 (30:19):
Um traditional, so uh it's it's interesting.
WeFunder is actually undergoinga pretty big evolution right
now.
Um really actually, you know,Mark, I met you through the the
Paragon uh or Janus slashParagon motorcycles raise.
Um since that race, we nowsupport Reg D, meaning
traditional uh angel investmentas well.
(30:42):
Um and with that change, we madea big change in terms of our
structure.
In the past, we requiredcompanies to have a lead
investor in their Reg CF race,and frankly, made it sell it,
made selling the platformharder.
But we basically said, okay, ifyou're gonna race from retail
investors, you need to have atleast one person with some like
some significant skin in thegame that's investing on the
(31:02):
same terms, it's gonna offerthose people representation on
the platform.
Um today that that's no longerrequired.
The founders can be the sign,the proxy designer for the for
for the SPD of We funder.
Um the reason we're doing thatis because it aligns with reg D
fundraising and how peopleoperate there.
Now, I we still really believein having a lead investor.
(31:24):
And if a company is trying toraise on you know what I view as
what we see as you know,out-of-touch terms, we'll
probably still say, hey, like ifyou we're gonna host this raise,
you need to bring in somebodywriting a significant check on
these terms just to like provethat there are real people out
there that want to invest.
Yeah.
But but um from a controlperspective, Eric, um, you know,
(31:48):
the the founder can be thesigner, the proxy signer for
that SPB.
SPEAKER_05 (31:53):
Sounds like a great odd great deal for a founder.
I mean, you have like that thathas no there's no it's not
voting stock, obviously.
SPEAKER_03 (32:01):
We we don't common stock raises on WeFunder.
So it is the the the thefounders that the investors are
investing in preferred sharesthat have preference over
common, but they're notdelegating rights to somebody
that might work against them.
Does that make sense?
Yeah, so it's non-votingpreferred stock.
SPEAKER_04 (32:22):
Yeah, most people don't realize that really
preferred stock, in my opinion,is not preferred.
But anyway, while I always getinto arguments because it
because it doesn't have votingrights, okay?
But it has like preferential forlike sales or whatever, right?
Yeah, but if most of the time itfunctions like debt more than it
(32:42):
does equity.
But anyway, we could have thatdiscussion.
SPEAKER_03 (32:44):
We we do that because we think that like most
angel investors are investing onpreferred, and so we think that
our angel investors, micro angelinvestors that we fund her
deserve the same right.
I I think you're right, Mark,that in most cases it's like not
actually gonna end up being thatmuch of an issue.
And you're right, if there waslike a liquidation of assets,
the preferred investors are justgetting, you know, the the that
(33:07):
that first.
And it does kind of functionlike that.
But really, what we're trying toavoid is uh uh a venture
investor or some big investorcoming in later and getting
preference over the you know theretail investors just because
they were small check investors.
SPEAKER_04 (33:22):
But let's go back to though to the legal form of the
entity that is raising capitalon WeFunder.
So let's uh uh you know I knowin our case we were a C Corp,
which makes it very easy becauseother entities can own um
ownership in a C Corp.
But if you had an S-corp, it'snot gonna work.
(33:44):
Is that not right?
SPEAKER_03 (33:45):
Yeah, you can't you cannot raise you cannot raise
via Reg C F as an S-corp.
SPEAKER_04 (33:49):
But you can as an LLC, though.
Is that right?
Yeah, you can as a BLC Corp.
SPEAKER_03 (33:54):
There are some complications as an LLC, right?
As an LLC, because because anSPV is an LLC, uh, try not to
because the entity that peopleare investing is an LLC, an LLC
raising or we funder doesn'toffer the same simplification uh
of the cap table that um yeahI've never been a C Corp does.
(34:15):
So you'd have to you'd have toissue K1s every year to all the
all of the investors, which ifyou have a very successful
raise, becomes a pretty big job.
Um it's our strong ref pref uhrecommendation to anyone trying
to raise more than like the 124klevel is you should either
convert to a C Corp or chooseyou can stay in a LLC and be
(34:37):
taxed as a as a corporation,right?
You just make a tax selection.
Um but that's if you're raisingequity, you really should do
that just because it creates alot of like room for error.
SPEAKER_04 (34:49):
I'm a big fan of C Corps anyway today.
I mean, first off, the tax well,the tax rates are lower than
individual tax rates.
That's a that's a big plus.
And if you do want to preserve,um, if you want to retain
earnings and you're not tryingto pay out a bunch of profits
along the way, you're trying togrow your business, C Corp's
just a better structure.
(35:10):
It's easier to retain.
Because the the the money thatan S-corp or LLC makes is a
pass-through entity.
Whether it you take it out ornot, it's taxed.
Because the company's individuallevel.
Because the company made theprofit.
Yeah, if the company makes$100,000, let's say, and you're
the sole owner of your LLC, youget the K1 that says I made
(35:33):
$100,000.
You might not have gotten any ofthat.
Because you've been putting itback in the business.
You've been putting it back inthe business.
So the way the IRS views that isyou made$100,000 and you
reinvested, you pay tax on the$100,000.
With an with a C Corp, you onlypay corporate tax based on what
you made, and the corporate taxrates are lower.
(35:54):
Like your individual tax rate ormine is going to be higher than
a corporate tax rate by fartoday.
It's what is it, like 21% orsomething?
It's low.
It's in the 20s.
It's in it's in the it's in the20s.
It's very low now compared toyour individual tax rate.
And so that's the reason.
It's just easier to retainearnings.
(36:14):
Plus, it's sort of the mostlegitimate legal form of
organization that gives you themost flexibility.
Is a C Corp like the oldest?
Yeah.
They're all all corps start outas a C Corp, and then you can
file an election to be taxed asa subchapter S.
They all start as a C Corp.
Even LLC.
No, LLC is a limited liabilitycompany.
(36:36):
That's a totally differententity.
Well, but I mean, like, what'sthe original corporate
structure?
SPEAKER_05 (36:40):
Corporation would be a C Corp.
C Corp.
I'm just thinking like back inthe day when all this stuff
really because we had that oneepisode we were, and this is
kind of cool, Reed, we weretalking about I was doing my
history stuff, but one of thebig reasons that the writers of
this book, AmericanEntrepreneur, gave for America
(37:01):
being so successful and in beingour strength that we are, is
because of our legal laws thatwe have related to corporations
and how individuals can set upentities and are protected.
That outsurvive them.
That have outsurvived them andall that versus Europe versus
(37:21):
Asia.
Like it's the way the Americanlegal system is set up is
allowed us to be the countrythat we are.
And I just wonder if it was CCorp, was the LG.
Yeah, that's the original.
You think so?
Yeah, oh, I know so.
Oh, you know that as a fact.
SPEAKER_04 (37:36):
Well, I know that that's that C Corp is the is the
highest level in the basic uhcorporation.
SPEAKER_05 (37:42):
But that doesn't mean it was the original.
I mean, like I'm gonna do somefact checking and bust you out
on LinkedIn.
SPEAKER_03 (37:48):
I don't, I don't, I don't know that I don't know
anything about this.
I'm um you got me Googling inthe background here to see if I
can sound smarter than you guys.
SPEAKER_04 (37:55):
But I They didn't necessarily call it a C Corp,
but it was a corporation.
Okay, that's fair.
Yeah.
But I I mean, I despise LLCs fora million reasons.
I mean, how do you deal with theidea that all members of the LLC
operating agreement have to signoff on any changes to it when
you've got a Wii Funder as partof your cap table?
SPEAKER_03 (38:16):
We're still we're still putting them into uh a
pool, right?
And so there's still a proxy, asingle proxy for them.
The real issue is around K1s andtaxes, right?
It's like we we actually chargean extra fee if you raise as an
LLC because we will we'll do theK1s for you, but it's a lot of
work every year.
(38:37):
Um and if you choose not to paythat fee, then you're gonna have
to do it yourself.
And if you raised, you know, theaverage the average investment
on WeFunder, the the mediainvestment is something like
$250.
The average investment's alittle bit over a thousand.
But like, you know, if you raisetwo million dollars, it's a
whole lot of K.
It's a lot of K1s, dude.
Yeah, yeah.
SPEAKER_01 (38:56):
And how does it what I mean?
SPEAKER_04 (38:58):
If you there were uh if you were a LLC and you paid
distributions out to yourowners, typically you try to do
that, at least to cover your taxobligations, in my experience
with any pass-through entity.
I always tried to pay out 40% atleast to cover tax.
How do you deal with these wefunder investors?
They're not going to get thosedistributions, or are they?
SPEAKER_03 (39:19):
I mean, anything that you you you basically would
treat the we funder investors asa single entity and then we
split it up for you.
So you would send you a singlecheck to we funders.
SPEAKER_05 (39:33):
No reason y'all charge an extra fee.
No kidding.
My gosh, can you imagine that'sbrutal?
I mean, we also do revenuerevenue share on we funder,
right?
SPEAKER_03 (39:40):
We do that as well.
I think that's a read out ofyour pocket.
I apologize.
I'm talking to what were yousaying?
But you can do a revenue shareon WeFunder, right?
Like so we cut it up, we do thatas well, right?
So you where you're you knowyou're saying you're earmarking
a percentage of revenuequarterly, annually, or whatever
the timescale is, and you'resending it back to WeFunder, and
then we're chopping it up intoyou know however many pieces uh
(40:03):
according to the size of theinvestment.
SPEAKER_05 (40:05):
That's interesting.
But yeah, yeah, so that's avalue for somebody to invest,
right?
SPEAKER_03 (40:10):
Like they're kind of participating in For a brick and
mortar business or something,right?
Like we we we that's not ourcore product, right?
Like our product is built isbuilt around C Corps raising
equity or future equity, right?
The most common instrument thatwe funder is a safe, followed by
preferred equity, followed by aconvertible note.
Um but we that there are thereare businesses out there where a
(40:33):
revenue share makes sense.
Um, you know, you got if you'vegot if you've got healthy
margins and you're not trying tolike scale to be a huge
business, but you just want to,you know, maybe you need to
raise a little bit of money tobuild out a storefront.
So rather than rather thantaking on debt or rather than
having new ownership, you youknow, you just build your
business model so that you know,four or five percent of that of
(40:55):
your revenue is gonna go towardpaying back these investors, uh,
you know, some multiple on whatthey invested, you know, 1.5x or
2x or something.
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SPEAKER_05 (41:18):
You mentioned something that kind of goes to
my next question.
I'm gonna make sure I get thisin.
I'm sorry I'm kind of hijackingthis entire podcast.
SPEAKER_04 (41:25):
You're not.
I mean, when you got hair thatlooks like yours, as good as
that is.
That's what I'm talking about.
You can uh you can take thewhole thing, man.
Thanks, bro.
SPEAKER_05 (41:33):
It's all yours.
I appreciate that.
So you said safe, like so, likelet's talk about valuation.
So if I want to raise, if I wantto go on a raise, like you can
do a safe, so I don't reallynecessarily have to say what a
valuation is.
People are just investing likeit's a safe.
SPEAKER_03 (41:54):
Raising on uncapped safe on WeFunder, I would really
advise against, particularly inthis market, right?
Like you don't you're just notseeing many uncapped safes.
You were back in 2021 when uhpeople were investing in
everything all you know withoutreservation.
Um but the most commoninstrument is a safe.
(42:15):
I most retail investors franklylike you know, look at the
valuation cap on the safe andthink you know, that's the the
um that's the the bottom part ofthe fraction um when they're
kind of thinking about theirinvestment, which is not
strictly accurate.
Um but yeah, you can raise onfuture equity.
Um the reason I don't I think anuncapped safe doesn't work is it
(42:38):
creates hesitancy among yourcommunity.
And on WeFunder, like we thinkyou should think of the WeFunder
investors.
There's a million investors onWeFunder, right?
They're a force multiplier, andtheir force multiplication is
going to be based totally on youkind of eliminating all of the
questions that might be top ofmind that might give them pause,
(42:59):
right?
And an uncapped safe,particularly when you're in a
marketplace raising an uncappedsafe next to a bunch of capped
safes.
Why would I why would I investin that much less certain um
outcome?
SPEAKER_04 (43:10):
Once you start talking about safe safes in
general, I think it implies asophistication level of an
investor that a$250 or$1,000investor probably doesn't have
to.
I mean, think about that.
They understand havingfractional ownership in this
thing.
SPEAKER_03 (43:29):
Yeah, you know, that they can.
There are real questions aroundthat.
But and I think that's um, youknow, investor education is a
big piece of what we think aboutall day long.
But though the the what I theplace I would push back there,
Mark, is also yeah, I thinkequity is obviously the most
understandable structure.
But the biggest upside, any dealon WeFund, the biggest the
(43:52):
biggest upside deals on WeFunderare all on sakes.
Right.
So the people that are coming toWeFund are like really looking
for interesting.
Like an economic upside, areinterested in those deals and
they're educating themselves.
Uh, and I think we funder as aplatform, probably like we
should probably do more workhelping to inform people.
SPEAKER_05 (44:12):
Um uh, you should have your own video podcast.
Yeah, you should have more videopodcasts.
SPEAKER_04 (44:20):
I know a source for this.
Let's talk about it offline.
Yeah, I mean, they do everythinghere.
This is unbelievable.
SPEAKER_05 (44:28):
I wanted to close this deal right now, man.
Right now.
But but on the so explain to ouraudience about Cap Safe, real
quick.
SPEAKER_03 (44:36):
I mean, uh, since you guys are new educate, like
Yeah, so the but the way Safe,first of all, sounds stands for
Simple Agreement for FutureEquity.
Uh it's been popularized overthe next last decade or so.
It came out of Silicon Valley asjust kind of a simple way for
companies to raise earlycapital.
(44:57):
Basically, what a safe is doingis um putting off the issuance
of shares and stock and networkand saying, hey, like my
company's too early to make anypromise, any like hard promise
about the value.
But what a safe is saying is I'mI'm making I'm basically giving
you an IOU for future shareswhen I issue them in exchange
(45:21):
for your capital right now.
When I talk about a valuationcap, it's saying uh basically
the implicit promise is when Iissue shares, it's very likely
that the value of my business isgoing to be well above this cap,
but your equity is gonna beissued at or below that cap.
And so if I if you raise amillion dollars on a the easiest
(45:44):
way to think there's pre- andpost-money safes, but the most
straightforward way to thinkabout them is a post-money safe.
So if you raised a milliondollars on a post-money safe,
meaning after the milliondollars is in the business, it's
valued at$10 million.
The uh when that safe convertson a future financing that's on
a$100 million valuation, maybeit's priced at that point, those
(46:08):
investors in that million dollarsafe will have 10% of the
business because they're theywill convert to equity at that
$10 million cap.
Yeah, or the business is sold.
At that point, you so your$10million, you know, your million
dollar investment is now worth$10 million if the$10 million,
if the$10 million cap is raisesprice at$100.
It's a little bit esoteric, butI think as long as you're
(46:30):
talking about post-money safes,it's pretty, pretty
straightforward.
The the working it out work iseasier.
You have to factor in dilutionand all these things.
But the reason safes are usedare these are companies that are
going to move very quickly andraise a lot of capital before
they're kind of establishing abaseline for their business,
right?
Like uh it's not if I've if I'vetaught if I've got 10 customers
(46:54):
in a market of a millioncustomers, my revenue today is
not an accurate representationof what my business the value my
business model can create.
SPEAKER_05 (47:03):
Yeah.
Makes sense.
And then you also do convertiblenote.
Did you say that earlier?
SPEAKER_03 (47:08):
Yeah.
Which is similar, it's an olderinstrument that has an element
of debt involved, right?
It's like if the if if the ifthe company fails and doesn't
raise capital, additionalcapital, instead of going poof,
the investors have a have a uhthere's a debt element where
they could be paid back uh withinterest.
SPEAKER_05 (47:27):
Yeah, I get I I guess it makes I understand
convertible not.
I'm just trying to think aboutit in a we funder scenario.
It gets a little confusing onhow all those but it's just all
the same principle because itends up being just one investor,
basically.
It's just a fractional honest,right?
SPEAKER_03 (47:43):
It's just smaller shares, right?
So, you know, you raise amillion bucks and I've got a
hundred dollars in it.
SPEAKER_04 (47:48):
Let me ask one more question, though.
I think it's important.
Let's say I'm an investor in WiiFunder and I buy$1,000 worth of
ownership and whatever it is.
How can I ever get that moneyback if that company is not sold
externally?
Is there any liquidity to it atall?
Ever?
SPEAKER_03 (48:08):
There's a that's a great question.
Um, because I think it's thebiggest, it's the biggest
problem facing our industry,liquidity.
There is not a formalizedsecondary market for private
private investments anywhere.
Right.
I mean, we we facilitatesecondary transactions pretty
regularly for individualinvestors.
You know, they find they findsomebody that they're gonna sell
(48:29):
their shares to.
But the reality is that umthere's no there's not good
liquidity.
And if you're selling aninvestment in the company on
WeFunder to somebody else,you're probably selling it at a
huge discount.
Right?
The expectation of an investmentlike this should be I'm never,
I'm either gonna, you know,either there's some sort of you
know, dividend, like a revenueshare or a profit share coming
(48:51):
back to me, or I'm probablynever gonna see this again.
Um which is why, you know, thisis why the venture model kind of
is built on a lot, making a lotof high-risk bets, and they're
looking for big returns to eachof those bets.
Um, but we I mean we've seenliquidity, like we saw the the
first company to raise aWeFunder uh did an IPO six
(49:12):
months ago.
It's called Beta Bionics, it's abiotech company.
We're starting to see that.
I mean, these are real issuesthat the SEC has to deal with,
right?
In in helping companies gopublic uh more easily.
You know, back in the 90s,people went public with a$50
million valuation.
Now, you know, Stripe is worthbillions and has no plans to go
public.
(49:32):
Um you know, liquidity is is aquestion.
My the reason I work in thespace is because I think that I
think that problem will besolved.
Um, but it it it's a it is anissue that there's not um
there's not a you know astraightforward solution for
right now.
SPEAKER_05 (49:48):
Sure.
So about time, what I wanted tomake sure we do, right?
We've been talking like, okay,our listeners, you're small
business, you need to raisecapital.
We've talked about a lot ofcomplicated scenarios, honestly.
Sure.
But to but what I'm but I thinkthat give you the last couple
minutes here, Reed, to becausewhat we funders value that
(50:10):
you're providing for these foundthese founders is to simplify
this process, right?
And to help guide in like youknow what I'm saying?
Like, I think that that's Idon't want I want to make sure
that the the listenersunderstand that value after this
complicated.
SPEAKER_03 (50:24):
I appreciate you saying that, Eric, because I I I
kind of wanted to get thereearlier too, and I you know, I I
get lost in my own thoughts.
Um like the way that if I'm afounder raising state, so
weFunders changing as aplatform.
Traditionally, we've onlysupported Reg C F.
Like I said, uh Mark, we nowsupport Reg D fundraising as
(50:46):
well.
And so the reason we've donethat is pretty we really dislike
this this kind of there was akind of a split in fundraising.
People were like, I'm raisingvia reg D or I'm raising via Reg
C F.
I don't like it shouldn't matterwhat regulation you're raising
under, right?
It should matter who like thethe capital that you're raising
(51:07):
is the important thing.
Uh there are different benefitsto different capital, right?
Raising from venture capital,they prompt their promises a
Rolodex and connections andstuff.
Your community is promisingloyalty and a street team and
friendly, uh, you know, kind offriendly money, basically.
Um, if I'm a founder approachingthis today, what I would be
(51:28):
doing is setting up a page onWeFunder and starting to build
my community there.
And likely I'm starting myfundraise, closing a few bigger
checks via Reg D, via likebigger angel checks, things that
only accredited investors caninvest to kind of price out my
deal.
And then only when I'm done withthat, I transition to Reg C F.
(51:49):
And it's the what Reg C F isoffering is the ability to for
you and your supporters to helppromote that you're raising
capital and in empowering you toreach a bigger audience of
potential investors.
Um and and that that's it.
It's like it's just anotheroption to stack in there
alongside um a lot in your inyour capital raise.
(52:13):
Um, you know, I I we're gonnastart seeing companies that
raise, you know, they mightraise a million dollars on
WeFunder, but maybe they raise200,000 from a from retail
investors, right?
So they raise 800,000 from angelinvestors and venture
capitalists.
They're using WeFunders checkoutflow to do that.
And the reason they're doingthat is basically it's
simplifying, it's giving you asingle point of truth to point
(52:34):
all of these investors.
It's giving you a platform tostorytell about your company.
SPEAKER_04 (52:39):
Yeah, I mean, that's exactly the scenario we had at
Paragon.
I mean, if you look at themillions of dollars we've raised
from accredited investors tostart with, it sort of validated
the whole thing.
And then you go to the WeFunderplatform and go, look, this is
what's happened, right?
SPEAKER_05 (52:55):
I mean, what I would say would be the nice I'm sorry,
but you guys started today withthat's sorry.
Well, just real quick, what I'dsay it'd be nice though is if
you started with thoseaccredited investors and we were
being pointed to the WeFunderenvironment, and that's where we
(53:16):
were learning and reading andand and kind of you know uh
going into, then when you moveto the crowd, the the community
side, yeah, you're still yeah,your all-accredited investors
would have been able, would havehad an experience with WeFinder
that could have maybe helped youparticipate in the world.
No question, right?
Yeah, absolutely.
SPEAKER_03 (53:34):
Because this is exactly yeah, this is exactly we
just launched that ability inFebruary.
So when Paradon was setting up,we could not support that.
We actually haven't even liketold we haven't even promoted it
publicly.
We're gonna we're we're planningto tell everyone on April 2nd.
So you guys are hearing thisearly that you cannot do this on
WeFunder.
SPEAKER_05 (53:54):
But that's exactly we just be just we were like the
first at bat on Big Talk aboutsmall because they break a media
network, right?
SPEAKER_04 (54:02):
Breaking news here before April 2nd, though.
Well, what's next Thursday?
I don't know.
What is next Thursday?
SPEAKER_05 (54:11):
April 3rd or something.
But what what were your well,yeah, we got you.
What were what were your lastcomments though?
SPEAKER_03 (54:18):
Yeah, yeah, I apologize here.
Um what what I was saying isbasically like Eric, you you you
hit the nail on the head there,right?
It's like we've had this falseseparation, and what we want to
create is a place where itdoesn't matter what regulation
you're raising under, it's thepeople that are passionate about
you.
When you you're good, you're thethe bigger big checks are gonna
(54:41):
come in first and validate this,and you're gonna help build
momentum there.
And then you open up, you know,maybe once a year you open up
for the little checks, right?
But it's a it's a single placeto talk about building your
business.
Um, and that's that's that's theimportant thing, is it's not
about reg CF versus Reg D versusventure capital.
(55:01):
If you're building a communitythat's gonna back you, uh it
shouldn't matter if I if you'rerich or poor, right?
It just matters that you'repassionate about the problem.
And so if you're storytellingthere, that you're creating
leverage uh and creating thepotential of of investment.
Um that's what that's whatthat's what we think everyone
should be able to do.
SPEAKER_05 (55:22):
Creating the market.
That's it, man.
Well, hey, that's a good placeto end.
Reed, how do how do people get ahold of WeFunder?
I mean, what are they?
Wefunder.com.
SPEAKER_03 (55:31):
Go to WeFunder.com forward slash raise and start
setting up company.
Um it's self-service.
Arc team will reach out.
But if anybody on this podcastis interested, feel free to
email me at um read r-e-a-d atwefunder.com.
I'm happy to chat with anybodyand help them understand how to
do this well.
Um and yeah, I mean, that thatthat's it.
(55:52):
We're we're we're always here tohelp.
SPEAKER_04 (55:54):
Well, I I can say that Red's been great to deal
with, and he's always veryhelpful and not condescending
and and and um treats everybodywell.
SPEAKER_05 (56:04):
So well, it's been nice that that you spent time
with us and helped help ouraudience better understand
what's going on.
Really appreciate that.
Great episode.
SPEAKER_03 (56:12):
I appreciate it.
SPEAKER_05 (56:13):
Um thanks for the time.
Well, until next time, this hasbeen another episode of Big Talk
About Small Businesses.com.
SPEAKER_04 (56:26):
Thank you, Reid.
See ya, Reid.
SPEAKER_02 (56:35):
Thanks for tuning in to this episode of Big Talk
About Small Business.
If you have any questions orideas for upcoming shows, be
sure to head over to ourwebsite,
www.bigtalkaboutsmallbusiness.com,and click on the Ask the Host
button for the chance to haveyour questions answered on the
show.
Stay connected with us onLinkedIn at Big Talk About Small
(56:56):
Business.
And be sure to head over to ourwebsite to read articles, browse
episodes, and ask questionsabout upcoming shows.
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