September 2, 2025 • 27 mins
In this episode of the Directed IRA Podcast, attorney and CEO Mat Sorensen sits down with Ahmed Ahmed, Head of Funds at WeFunder, to discuss how investors can use a self-directed IRA to invest in startups and venture capital—an asset class once limited to Silicon Valley insiders and institutional funds.
The conversation explores how WeFunder democratizes early-stage investing through Regulation Crowdfunding (Reg CF) and Regulation D (Reg D) offerings, giving both accredited and non-accredited investors access to vetted startup deals, diversified venture funds, and even pre-IPO companies.
Mat and Ahmed explain:
- How to invest in startups using your self-directed IRA or solo 401(k)
- The difference between Reg CF and Reg D offerings on WeFunder
- What the Orange Funds are and how they track Y Combinator companies
- Real examples of early-stage companies that scaled (e.g. Eight Sleep, Replit)
- Why diversification is critical in venture investing
- How to evaluate startup founders and what signals matter most
- What to expect in terms of risk, timelines, and exit strategies
This episode is essential listening for self-directed investors interested in private markets and early-stage innovation—and how to access it within a tax-advantaged retirement account structure.
Chapters:
00:00 – Introduction to WeFunder and Startup Investing
01:30 – What Is Reg CF and Who Can Invest
03:16 – Inside the Orange Funds and Y Combinator Strategy
07:40 – Risk, Return, and Realities of Startup Investing
11:50 – Using a Fund Model to Diversify Your Startup Portfolio
19:22 – How to Evaluate Founders, Traction, and Deal Flow
24:27 – Getting Started with Startup Investing Through Your IRA
WeFunder Homepage: https://wefunder.com/
Directed IRA Homepage: https://directedira.com/
Directed IRA Explore (Linktree): https://linktr.ee/SelfDirectedIRA
Book a Call: https://directedira.com/appointment/
Other:
Mat Sorensen: https://matsorensen.com & https://linktr.ee/MatSorensen
KKOS: https://kkoslawyers.com
Main Street Business https://mainstreetbusiness.com
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:08):
Welcome everyone to the Directed IRA Podcast.
This is Matt Sorensen.
I'm joined with a special guesttoday, Ahmed Ahmed from
WeFunder.
He's head of funds there.
I'm going to have him introducehimself today.
But what we're talking about isinvesting in venture or
startups.
This is an asset class your IRAcan invest in.
You can invest in, of course,with non-IRA dollars.
We actually had some clientsuse their IRAs to invest on
(00:30):
deals that are on WeFunder andthere's a couple of different
things that they do there.
Ahmed will get into it.
But, ahmed, welcome to the showtoday.
I appreciate you being on.
Speaker 2 (00:39):
Thank you, Matt.
Yeah, happy to be on.
Speaker 1 (00:41):
Yeah, tell us about WeFunder and kind of your role
there.
Speaker 2 (00:44):
Cool, yeah, happy to give a little bit of background.
So WeFunder is Robinhood forstartup investing.
We are a YC company.
We started in the winter 13batch and for most of our time
and efforts are spent towardsthe Reg CF side of the business.
Time and efforts are spenttowards the reg CF side of the
(01:05):
business, so unaccreditedinvestors can invest in startups
through regulation crowdfunding, which was legalized during the
jobs act in 2016.
Speaker 1 (01:17):
And reg CF is for someone that's like, hey, I'm
not accredited and you couldstill be accredited and do it,
but like, unaccredited,basically, anyone could invest
through reg CF offerings.
These are not publicly tradedcompanies, these are small
startups, right?
Um, how much is a typicalinvestment in reg CF, though?
Cause those are usually smallerdollar investments, cause
that's that crowdfunding conceptGet a lot of investors in at
smaller amounts.
Speaker 2 (01:37):
Yeah, so um, the median investment on we funder
for regulation crowdfunding is$250.
The average investment isaround $1,000.
And I'd say typically a companywould raise around $250,000
total from RegCF on average.
We have multiple companies thatraise $5 million from RegCF,
(01:59):
which is the legal limit.
People add on to that throughRegD and um and then yeah, so
particularly it's for smallercheck sizes on reg cf and the.
I think the most successfulcases on reg cf are companies
that just have a lot ofcustomers and they think it's
cool that their customers can beshareholders.
(02:19):
Uh, mercury has done that,substack has done that, replet
has done that, substack has donethat, replit has done that and
they just had an overwhelminglypositive response and it's more
like a cult following when youintroduce that it's.
I think it's primarily the bestform of marketing you can have.
Speaker 1 (02:34):
Yeah, yeah.
Have some people invest in you.
They're like invested in yoursuccess, literally Um okay.
Speaker 2 (02:56):
Now there's another side, though, of what we
fundunder does, which is more ofa fund, typical fund structure
side.
Tell offer you exclusive dealsthat would only be offered
through Silicon Valley and easyfor anyone to invest.
It's the same checkout flow asRecCF.
So you just see a deal you like, you put in your bank account
(03:17):
information or your directed IRAand then you just invest
straight through that.
So my side of the business isparticularly seed and series A
companies.
We have series Ds and beyond,so we offered, like Anthropic,
OpenAI, SpaceX, XAI, a dozenmore companies like that.
(03:40):
But we also offer somethingcalled the Orange Funds, which I
particularly am really excitedabout and I spend a lot of my
time at WeFunder on.
So the Orange Funds the goal ofit is to almost emulate and
track the Y Combinator batchesas an index.
So for those who don't know, YCombinator is regarded as the
(04:01):
most elite accelerator in theworld.
Companies who go into YCombinator have a much higher
chance of succeeding than thosewho don't.
I think the percentage chanceof a Y Combinator becoming a
unicorn so a billion dollars invaluation is at 5%, which is 5x
(04:22):
a normal company, and the powerlaw dictates that if you just
invest in Y Combinator companies, you will make a higher return
than if you invest in othercompanies.
Speaker 1 (04:34):
Yeah, Going back, and some of the companies from Y
Combinator I mean that's likeStripe, I think, is from Y
Combinator- Stripe Airbnb.
Speaker 2 (04:42):
What are some of the?
Speaker 1 (04:43):
ones that are recent, yeah, the big ones everybody's
used.
Speaker 2 (04:46):
Yeah, I think the most recent ones that are there
are different, so recent markupsI guess that are in the news.
We just got a markup for 8sleep.
Speaker 1 (04:59):
Okay, I love 8sleep.
I use 8sleep.
You can get your promo code.
Promo code Matt.
Go to 8 Eight Sleep I use EightSleep.
You can get your promo code.
Promo code Matt.
Go to eightsleepcom.
I'm just joking, they're alwaysadvertising on podcasts, but I
do love my Eight.
Sleep bed.
Yeah, eight Sleep.
If you're listening, hook me up.
I bought three of them forcrying out loud Love the Eight
Sleep bed.
Okay, so what's their markupnow?
Speaker 2 (05:21):
I believe we're at 40X for Eight Sleep.
Uh, we invested in their ycround at a 20 million valuation
uh I believe they just raised atan 850 million uh valuation.
So congrats, eight sleep yeahyeah, but it was a nice little
(05:41):
markup for us, Cool.
And then most recent companiesthat have gone through the
batches that are doing quitewell.
Corgi is an AI insurancecompany.
We invested in them in, Ibelieve, summer of 24 or 23.
They just raised their Series A.
Artisan if you're an SF native,you would have seen their
(06:04):
billboards everywhere.
They're the AI sales companyavatar company.
They just raised their Series Aand we're seeing a lot more
companies coming from YC raisetheir Series A much faster than
normal.
Speaker 1 (06:20):
So that's the orange funds though.
So if I invest in you call themthe orange funds, then that has
allocation to some of thesecompanies coming out of YC Y
Combinator.
Speaker 2 (06:32):
Yeah so the aim for the orange funds is.
Yc will typically get 200companies in every YC batch.
It ranges between 170 and 200.
Just between like 170 and 200,we try to pick the top 25 to 30
companies in each batch and wejust go out and get allocations
across the board.
We usually do that through likeI will split the work with two
(06:55):
other yc alumni or three otheryc alumni with domain expertise
and that thing.
So we currently we're runningthe s25 batch, which a couple of
your users have invested in,and one person is focused on
DevTools, for example.
They've ran successfulcompanies in DevTools, so I
trust them more than anyone todecide what's a good investment
(07:15):
on that.
The other person is focusedsolely on AI research, large
language models, um contexts,mcps those things that, like, I
never understood until likethree months ago.
Their entire life's work isbased on that, so they I trust
them to decide.
And then I have a biotechresearch.
So I was a cancer researcherfor, uh, five years of my life
(07:39):
and, um, I've been taking callswith anything that is remotely
close to automating biologicalresearch.
Um, and there are a couple ofgood ones this batch which I was
really excited about, takingcalls with anything that is
remotely close to automatingbiological research.
Speaker 1 (07:50):
And there are a couple of good ones this batch
which I was really excitedabout- so we try to determine
which ones are most poised towin and we just spread the board
.
So these ones let's talk aboutthen, kind of like that seed,
series A type stuff.
I mean, these are really earlystage investing.
Is that what these are going tobe?
And like, let's see theseorange funds, for example.
These are like they may have aproduct already but they
(08:12):
probably don't have sales.
Do they have sales and revenueyet?
Like, where are we talking hereand help people understand
maybe kind of what seed andseries A is, how early that is.
Speaker 2 (08:21):
Yeah.
So I think primarily if you'renot investing, they have an MVP,
so minimally viable product.
They like have hacked somethingtogether that is useful for
companies but it's not reallylike at the standard for an
enterprise customer, and that'sprimarily where a lot of the YC
(08:42):
companies start the batch out.
So if you apply to YC you'rebasically like the only chance
you have to get in is if you'renot X OpenAI, x Stanford, you
have to have an.
MVP to get in, and that's whereyou start.
You then have three months ofthe most intensive boot camp you
(09:03):
can have for a startup.
You have Sam Altman coming into give you talks.
You have the Airbnb founder,brian Chesky, coming in to give
you talks, talks.
You have the airbnb founder,brian chesky, coming in to give
you talks.
Paul graham, who's regarded asthe most elite startup investor
in the valley.
Um, he like advises companiesand in three months, you are
(09:24):
basically expected to showcaseyour product in something called
demo day, which is used to befor investors to go in and
decide which companies to investin.
Currently, companiesoversubscribe their rounds
before them, uh, but at thatpoint, mostly they'll.
They're starting to haverevenue.
(09:44):
They're starting to close theseenterprise contracts and some
of them are actually goingreally heavy and closing really
big names.
We invested in a company calledI'm not going to say their name
because I don't know if this ispublic information yet, but we
invested in a company thatclosed, lovable, as a customer.
Lovable is the fastest growingstartup in history.
(10:05):
They were first to get to $100million in annually recurring
revenue.
So they're closing really bignames and this is still pre-seed
.
So the orange funds or the YCfunds in particular.
I think accelerate faster thananything else.
Speaker 1 (10:26):
Yeah, so and so why Comet?
Or just for people understand.
I mean, this is like if you'renot familiar with it is like it
is a pretty elite place for ifyou're a startup, particularly
in the tech space, and you havea very compelling big idea where
you go, get help and mentorship, and it's like it's very hard
to get in.
If you get in, it's like kindof like this badge of honor that
(10:49):
you know we're in Y, we gotinto YC, and so venture and
startup investors are likethat's like a, you know, that's
a diligence box checked for us.
You know, it's like if, if thepeople at YC thought that this
was good enough to get in, then,um, then there must be some
validation to it.
Now, most startups fail right,and that's the thing we've got
(11:11):
to understand in this categoryis the most likely outcome is
that if you just invest in onecompany, it's going to fail.
Ahmed, I mean we had a at ourevent.
We have an AltAsset Summit thatwe do every year.
By the way, it's October 16thand 17th everyone
(11:38):
AltAssetSummitcom in Scottsdale,arizona this year.
But we did one in California,in Southern California, two
years ago, and we had a speaker.
She was the president of TechCoast Angels.
They do a lot of angelinvesting.
I remember one of her commentswas if you invest in 10 startups
and this is as an angelinvestor, but this is going to
(11:59):
be early stages the most likelyoutcome of nine of them will
fail and maybe one makes it.
But your hope is that that onethat makes it goes 100x and it
delivers a significant return.
I mean, for someone that's newto investing in venture and
startup, how should someonethink about that and what's
their expectation going in?
(12:20):
And I know you have the fundmodel too we can talk about here
but just as they're thinkingabout individual company
investing and how should theylook at this asset class, I
think there is a different wayto look at startup investing
than Silicon Valley doescurrently.
Yeah.
Speaker 2 (12:41):
There's a certain naivety that comes with being an
angel investor in the Valley,but I think the advice I usually
give to people is likediversifying your financials and
your investments.
If you're going through yourIRA and you're picking, x amount
(13:02):
goes to government bonds, xamount goes to real estate, x
amount goes to ETFs.
I personally put in 5% of myinvestment over the years.
Over the year, uh, to go tostartups, and I probably could
increase it because I haveinsider knowledge and that is my
job.
So I I'm yeah.
Speaker 1 (13:23):
Invest in what you know Exactly.
Yeah, like I invest in whereyou know.
Speaker 2 (13:28):
I totally believe the amount of capital that goes
into these private companies andthe timeline for these
companies to go public being somuch longer than it ever has
been before.
We recently saw Figma's IPO.
Cerebrus' IPO has been, it hasgone through, but it's been
delayed so many times.
(13:49):
Companies like Databricks isplanning to IPO so many times.
Companies like Databricks isplanning to IPO.
Anthropic just raised theirnext series B, I believe Sorry,
series C.
They're going to take some timeto IPO SpaceX.
God knows when they IPO.
Companies are staying privatelonger.
There is more money than hasever been before in these
(14:13):
private markets.
I do think people are missingout on money if they just rely
on public markets.
Speaker 1 (14:22):
Yeah.
So if I'm going to invest inthat asset class, though, should
I be thinking of a fund modelthen?
Because if I need to diversify,I mean I'm diversifying within
all asset classes, I guess byputting someone to real estate,
someone to stocks, someone tobonds, you know whatever the
typical advisor advice would be.
But if, like, all right, well,I'm going to put 5% into venture
(14:46):
, let's say, like, how do I dothat?
I mean, this is what we funders, like you've kind of like have
solutions for this and making iteasy, and like smaller amounts.
But also, what if 5% for me is,you know, 250,000, like you
know?
But I don't want to just buyone company at that amount, you
(15:07):
know so.
So how do I start figuring thatout, how to invest in that?
If I'm interested in that assetcategory and I want to start
doing it, what are my options todo that?
Speaker 2 (15:13):
Yeah, so we have different asset classes or
different ways you can invest on.
Wefunder in RIGD, primarily theOrange Funds, is a good way to
diversify, but it's still verynarrow in terms of how many
companies are in an Orange Fundor in those funds.
Usually it's around 26 to 30.
Okay, all right and YC onlyaccepts tech companies, and if
(15:35):
you think that's like a lack ofdiversification, there are other
ways to go about it.
Um, but the orange fundsusually return around 30 irr.
Uh, so I do think they're likea good class to diversify.
The amount of the differentcompanies we get or like are
very random when you look at itin three months time.
Yesterday I had a call with abiotech company.
(15:57):
The day before I had a callwith a drone company that maps
how much bale and hay a farmerhas collected.
I think that's the true natureof diversification.
But in general, we havedifferent funds.
I launched a biotech fund a fewmonths back called helix, and
(16:17):
that was primarily just ways toaccelerate research and anything
that goes through fda testing,just accelerating that process.
Um, we are are planning tolaunch an ai fund, a national
defense fund, a, a robotics fund, and those are different asset
classes that people could beinterested in From historical
(16:41):
research and context.
People that invest in thesespecific funds tend to have
specific domain knowledge inthat technology.
So we get a lot of requests forthe biotech fund and that just
happens to be the people thatare trying to request for it are
doctors and they believe thatthey know what they're looking
(17:05):
at and they want somethingthat's closer to home, so
they're specifically asked forthat.
Other people don't want to dothe research on AI and it moves
so quickly and new companiesspawn every other day and
competitors become obsolete.
People win Um, and they don'twant to have to keep up with
(17:25):
that, but they know that isgoing to be the future.
So they're just like someonelike me to just grind through it
and understand the market.
So they want that asset class.
So I'd say, if you're trying todiversify and you're a WeFunder
investor trying to invest inReg D, I would look at one of
the funds and invest your moneyin that.
(17:46):
However, I would keep an eyeout on the individual deals that
we get.
We usually average around two amonth.
Those are the open AIs, theAnthropix, the SpaceX and, if
you like, said company, and Ithink those companies are big
enough where there's enough datafor you to make a decision on.
Speaker 1 (18:06):
I would save some money for those Right now on
your guys' platform.
I could invest into SpaceX oropening Anthropic.
Speaker 2 (18:16):
We run rolling funds where they're only open for
around two weeks at a time forthat specific company.
We closed Anthropic around twoweeks ago and that was open for
three weeks.
Um.
We before then we did anotherXAI round, um.
So what we do is when a roundbecomes open, we get an
(18:38):
allocation.
We'll send it out to the peoplethat are have invested in the
funds before.
First they get early access andthen after that we open it up a
little bit more before we getoversubscribed again and people
usually have a timer of twoweeks to fund their investment
and then that's all theinvestments we're taking in.
Speaker 1 (19:01):
Okay, are those individual investments typically
?
Are those reg CF typically,since they're not in a fund
model?
Or are those those, any of theReg D or those are all Reg CF?
Speaker 2 (19:12):
They're Reg D.
Speaker 1 (19:14):
They're.
Speaker 2 (19:14):
Reg D.
Speaker 1 (19:14):
Okay, those are Reg D Okay.
Speaker 2 (19:16):
Those are Reg D.
If you want to invest in anycompany currently on Reg CF, you
can go to WeFunder and then onour Explore page.
You don't have to be accreditedon that.
There are, I think, over 180companies currently open for
investment.
Speaker 1 (19:34):
Okay, so all right.
So let's say I've determinedthe amount of money I want to
invest and maybe I even want touse my IRA.
Of course you can do that withyour account here at directed
IRA.
You can invest in venture andstartups.
You can use we fund or we'vehad many accounts invest in that
.
I think we'll see more and moredo that as this asset class is
becoming more accessible, Ithink, to individual investors,
and I think that's one of themissions that WeFunder has done
is try to bring this asset classto individual investors instead
(19:57):
of just the wealthy SiliconValley or the venture firms.
I know there's a lot of peoplewho like to kind of follow other
prominent firms and investmentsand I've seen this on WeFunder
too to see who else is investedin this.
You guys typically willindicate if there's been a
well-known venture firm orsomeone else that's invested in
the company, and I think that'sa nice thing to know right, kind
(20:21):
of like this follow the leader,maybe type model, but what are
those things people should lookat?
You maybe talk about that orsome other things when in when
they're analyzing thesedifferent opportunities to see
what's a positive or a negativething I should look at and I get
there's different asset classesand things.
Invest in what you know inthose categories you like.
But what should other peoplemaybe be paying attention to is
(20:43):
they're looking that you guysmight have show in the diligence
docs or kind of information forthem to digest.
Speaker 2 (20:50):
I think there's two different distinctions there.
So Reg CF companies arerequired to file a form C.
You get a bunch of it.
You get a lot more informationthat's legally mandated to be
there.
So if you're raising up to fivemillion, you have to file an
audit.
If you're raising up to 1.25million, you have to file a
(21:11):
financial review, so you getaccess to their financials,
which is big for RECCF companies, for startups, it doesn't
really matter that much becauserealistically, you're not
investing, yeah it's a bunch ofzeros.
You're not really investing inthere.
Oh wow, they made 30 grand ofrevenue this year.
What you're investing in therelike oh wow, they made 30 grand
(21:36):
of revenue this year, uh, right,what you're investing in is
particularly the founder um.
And I think that's what a lotof people get wrong.
They put a lot of emphasis onthe company's current traction
and the current product stateand they don't look at the
founder um.
Yeah, an analogy I give isParker Conrad, who was the
Zenith founder, then turned toRippling.
He was regarded as the bestfounder some people have met in
(22:05):
terms of just sheer ambition anddrive.
And if you looked at Zenith atthe time that they started so I
believe they were winter 13, youwould have not invested in them
if you were basing it offtraction and current product
state.
But if you had no idea what hewas building and just had coffee
(22:25):
with him for five minutes, youwould have maybe sunk your life
savings in him.
And it's harder to do whenyou're looking at stuff on
WeFunder because you can't callthe founder, but there's enough
that you can get in watching thefounder video If it's a venture
funds investment, look upYouTube videos on the founder.
(22:49):
We'll show videos on the profilewhen we're looking at pages and
their current traction,obviously, and like the product
state.
But what I mostly look for isdoes this person have an inkling
of what it takes to be the nextMark Zuckerberg?
And that's something that SamAltman has like repeatedly said
he looks for at startups and Ithink that's the biggest
(23:11):
differentiator.
Speaker 1 (23:12):
Yeah, I mean you're you're investing in the person
as much as you are in their idea.
Right, they've been their ideaor their product or concept or
company.
I mean the person that's goingto execute that.
You're investing in that asmuch as anything else.
I totally agree with that.
So, all right, so I can maybesee maybe some other you know, I
know you guys will probablysome detail.
There's been some like marqueeventure investors that have
(23:34):
invested um, look to who thefounder is or maybe there's some
co-founders involved to try toget a feel for them Obviously
understand the vision of whatthey're trying to create.
Is there a big you know?
Do you see that breakingthrough?
And you know you have to useyour own judgment on this.
This is, of course, this is thefun part of the investing.
You know is able to make thosetypes of decisions and analyze
(23:56):
that for yourself.
And, of course, we're not givinginvestment advice here at all.
That's not our role.
We're not giving investmentadvice.
I don't think you're doing thatat WeFunder For us.
We're just trying to provideaccess with your IRA to invest
in what you know and what youbelieve in and to take control
of your retirement account funds, and I think places like
(24:18):
WeFunder are a great place to gobecause they're providing this
opportunity for everybody.
It's not just you have to getthe right connection or you have
to even be uber wealthy.
You can even, through these regCF offerings, it's open to
everyone to have some type ofallocation, even if it's 250
bucks, as we talked about, intoventure or startups.
So any other words of advicefor people as they get on
(24:42):
WeFunder or they're looking atventure startups that you'd want
to point people to?
I don't know if there's anygetting started.
Stuff sounds like registeringto get information when you are
like, let's say you're like, oh,I want to get the next xai
allocation or the next.
You know, you know what is the,because there's notices.
Speaker 2 (25:01):
I guess you're sending out on that to people on
the platform yeah, um, ifyou're interested in just
joining we funder as a likeinvestor to invest in reg cf or
reg d?
Um, that's really easy.
Just go to we fundercom?
Um and then you can sign up toget access to the accredited
deals.
(25:21):
You have to set yourself as anaccredited investor as you sign
up through the flow, which issimple to do?
Um, and then the way we likenotify people is just through
email, so please make sure youread the emails you read your
emails when they come from uh,me, uh or we've under uh, but
(25:42):
yeah, um, awesome.
It is easy to invest, and that'sthe entire.
We're not giving investmentadvice.
The only job I have, and I'mstriving for, is to allow anyone
to have the same level ofaccess as a Silicon Valley
insider does.
Speaker 1 (25:59):
Awesome.
Well, I love that.
Thanks so much for coming onand sharing this.
Where should we send people to?
Just to the main page?
Is there any place we shouldsend them?
Any getting started place orjust get to the main homepage.
Speaker 2 (26:11):
Yeah, wefundercom slash home Good place to start.
If you guys want anyinformation regarding connecting
your directed IRA account toWeFunder, feel free to shoot us
an email.
Speaker 1 (26:22):
We're happy to help Cool, all right, okay, we'll put
that information in the shownotes and provide that links.
Ahmed, thanks for coming on.
Thanks for everyone tuning in.
We'll be back next week withanother incredible Directed IRA
podcast.
Until then, stay calm.
Self-direct on.
Speaker 3 (26:36):
And thank you everyone for listening.
A quick disclaimer and reminderthis presentation does not
constitute an attorney or CPAclient relationship and it is
always in your best interest toconsult competent legal and tax
professionals when conductingyour own personal transactions.
Speaker 1 (26:52):
We also want to make sure you know this is not
investment advice or financialadvice.
We're just trying to give youeducation, ideas and strategies
you can take to yourprofessionals or conduct your
own research on.
We'll see you next time.
Welcome everyone to the Directed IRA Podcast.
This is Matt Sorensen.
I'm joined with a special guesttoday, Ahmed Ahmed from
WeFunder.
He's head of funds there.
I'm going to have him introducehimself today.
But what we're talking about isinvesting in venture or
startups.
This is an asset class your IRAcan invest in.
You can invest in, of course,with non-IRA dollars.
We actually had some clientsuse their IRAs to invest on
(00:30):
deals that are on WeFunder andthere's a couple of different
things that they do there.
Ahmed will get into it.
But, ahmed, welcome to the showtoday.
I appreciate you being on.
Speaker 2 (00:39):
Thank you, Matt.
Yeah, happy to be on.
Speaker 1 (00:41):
Yeah, tell us about WeFunder and kind of your role
there.
Speaker 2 (00:44):
Cool, yeah, happy to give a little bit of background.
So WeFunder is Robinhood forstartup investing.
We are a YC company.
We started in the winter 13batch and for most of our time
and efforts are spent towardsthe Reg CF side of the business.
Time and efforts are spenttowards the reg CF side of the
(01:05):
business, so unaccreditedinvestors can invest in startups
through regulation crowdfunding, which was legalized during the
jobs act in 2016.
Speaker 1 (01:17):
And reg CF is for someone that's like, hey, I'm
not accredited and you couldstill be accredited and do it,
but like, unaccredited,basically, anyone could invest
through reg CF offerings.
These are not publicly tradedcompanies, these are small
startups, right?
Um, how much is a typicalinvestment in reg CF, though?
Cause those are usually smallerdollar investments, cause
that's that crowdfunding conceptGet a lot of investors in at
smaller amounts.
Speaker 2 (01:37):
Yeah, so um, the median investment on we funder
for regulation crowdfunding is$250.
The average investment isaround $1,000.
And I'd say typically a companywould raise around $250,000
total from RegCF on average.
We have multiple companies thatraise $5 million from RegCF,
(01:59):
which is the legal limit.
People add on to that throughRegD and um and then yeah, so
particularly it's for smallercheck sizes on reg cf and the.
I think the most successfulcases on reg cf are companies
that just have a lot ofcustomers and they think it's
cool that their customers can beshareholders.
(02:19):
Uh, mercury has done that,substack has done that, replet
has done that, substack has donethat, replit has done that and
they just had an overwhelminglypositive response and it's more
like a cult following when youintroduce that it's.
I think it's primarily the bestform of marketing you can have.
Speaker 1 (02:34):
Yeah, yeah.
Have some people invest in you.
They're like invested in yoursuccess, literally Um okay.
Speaker 2 (02:56):
Now there's another side, though, of what we
fundunder does, which is more ofa fund, typical fund structure
side.
Tell offer you exclusive dealsthat would only be offered
through Silicon Valley and easyfor anyone to invest.
It's the same checkout flow asRecCF.
So you just see a deal you like, you put in your bank account
(03:17):
information or your directed IRAand then you just invest
straight through that.
So my side of the business isparticularly seed and series A
companies.
We have series Ds and beyond,so we offered, like Anthropic,
OpenAI, SpaceX, XAI, a dozenmore companies like that.
(03:40):
But we also offer somethingcalled the Orange Funds, which I
particularly am really excitedabout and I spend a lot of my
time at WeFunder on.
So the Orange Funds the goal ofit is to almost emulate and
track the Y Combinator batchesas an index.
So for those who don't know, YCombinator is regarded as the
(04:01):
most elite accelerator in theworld.
Companies who go into YCombinator have a much higher
chance of succeeding than thosewho don't.
I think the percentage chanceof a Y Combinator becoming a
unicorn so a billion dollars invaluation is at 5%, which is 5x
(04:22):
a normal company, and the powerlaw dictates that if you just
invest in Y Combinator companies, you will make a higher return
than if you invest in othercompanies.
Speaker 1 (04:34):
Yeah, Going back, and some of the companies from Y
Combinator I mean that's likeStripe, I think, is from Y
Combinator- Stripe Airbnb.
Speaker 2 (04:42):
What are some of the?
Speaker 1 (04:43):
ones that are recent, yeah, the big ones everybody's
used.
Speaker 2 (04:46):
Yeah, I think the most recent ones that are there
are different, so recent markupsI guess that are in the news.
We just got a markup for 8sleep.
Speaker 1 (04:59):
Okay, I love 8sleep.
I use 8sleep.
You can get your promo code.
Promo code Matt.
Go to 8 Eight Sleep I use EightSleep.
You can get your promo code.
Promo code Matt.
Go to eightsleepcom.
I'm just joking, they're alwaysadvertising on podcasts, but I
do love my Eight.
Sleep bed.
Yeah, eight Sleep.
If you're listening, hook me up.
I bought three of them forcrying out loud Love the Eight
Sleep bed.
Okay, so what's their markupnow?
Speaker 2 (05:21):
I believe we're at 40X for Eight Sleep.
Uh, we invested in their ycround at a 20 million valuation
uh I believe they just raised atan 850 million uh valuation.
So congrats, eight sleep yeahyeah, but it was a nice little
(05:41):
markup for us, Cool.
And then most recent companiesthat have gone through the
batches that are doing quitewell.
Corgi is an AI insurancecompany.
We invested in them in, Ibelieve, summer of 24 or 23.
They just raised their Series A.
Artisan if you're an SF native,you would have seen their
(06:04):
billboards everywhere.
They're the AI sales companyavatar company.
They just raised their Series Aand we're seeing a lot more
companies coming from YC raisetheir Series A much faster than
normal.
Speaker 1 (06:20):
So that's the orange funds though.
So if I invest in you call themthe orange funds, then that has
allocation to some of thesecompanies coming out of YC Y
Combinator.
Speaker 2 (06:32):
Yeah so the aim for the orange funds is.
Yc will typically get 200companies in every YC batch.
It ranges between 170 and 200.
Just between like 170 and 200,we try to pick the top 25 to 30
companies in each batch and wejust go out and get allocations
across the board.
We usually do that through likeI will split the work with two
(06:55):
other yc alumni or three otheryc alumni with domain expertise
and that thing.
So we currently we're runningthe s25 batch, which a couple of
your users have invested in,and one person is focused on
DevTools, for example.
They've ran successfulcompanies in DevTools, so I
trust them more than anyone todecide what's a good investment
(07:15):
on that.
The other person is focusedsolely on AI research, large
language models, um contexts,mcps those things that, like, I
never understood until likethree months ago.
Their entire life's work isbased on that, so they I trust
them to decide.
And then I have a biotechresearch.
So I was a cancer researcherfor, uh, five years of my life
(07:39):
and, um, I've been taking callswith anything that is remotely
close to automating biologicalresearch.
Um, and there are a couple ofgood ones this batch which I was
really excited about, takingcalls with anything that is
remotely close to automatingbiological research.
Speaker 1 (07:50):
And there are a couple of good ones this batch
which I was really excitedabout- so we try to determine
which ones are most poised towin and we just spread the board
.
So these ones let's talk aboutthen, kind of like that seed,
series A type stuff.
I mean, these are really earlystage investing.
Is that what these are going tobe?
And like, let's see theseorange funds, for example.
These are like they may have aproduct already but they
(08:12):
probably don't have sales.
Do they have sales and revenueyet?
Like, where are we talking hereand help people understand
maybe kind of what seed andseries A is, how early that is.
Speaker 2 (08:21):
Yeah.
So I think primarily if you'renot investing, they have an MVP,
so minimally viable product.
They like have hacked somethingtogether that is useful for
companies but it's not reallylike at the standard for an
enterprise customer, and that'sprimarily where a lot of the YC
(08:42):
companies start the batch out.
So if you apply to YC you'rebasically like the only chance
you have to get in is if you'renot X OpenAI, x Stanford, you
have to have an.
MVP to get in, and that's whereyou start.
You then have three months ofthe most intensive boot camp you
(09:03):
can have for a startup.
You have Sam Altman coming into give you talks.
You have the Airbnb founder,brian Chesky, coming in to give
you talks, talks.
You have the airbnb founder,brian chesky, coming in to give
you talks.
Paul graham, who's regarded asthe most elite startup investor
in the valley.
Um, he like advises companiesand in three months, you are
(09:24):
basically expected to showcaseyour product in something called
demo day, which is used to befor investors to go in and
decide which companies to investin.
Currently, companiesoversubscribe their rounds
before them, uh, but at thatpoint, mostly they'll.
They're starting to haverevenue.
(09:44):
They're starting to close theseenterprise contracts and some
of them are actually goingreally heavy and closing really
big names.
We invested in a company calledI'm not going to say their name
because I don't know if this ispublic information yet, but we
invested in a company thatclosed, lovable, as a customer.
Lovable is the fastest growingstartup in history.
(10:05):
They were first to get to $100million in annually recurring
revenue.
So they're closing really bignames and this is still pre-seed
.
So the orange funds or the YCfunds in particular.
I think accelerate faster thananything else.
Speaker 1 (10:26):
Yeah, so and so why Comet?
Or just for people understand.
I mean, this is like if you'renot familiar with it is like it
is a pretty elite place for ifyou're a startup, particularly
in the tech space, and you havea very compelling big idea where
you go, get help and mentorship, and it's like it's very hard
to get in.
If you get in, it's like kindof like this badge of honor that
(10:49):
you know we're in Y, we gotinto YC, and so venture and
startup investors are likethat's like a, you know, that's
a diligence box checked for us.
You know, it's like if, if thepeople at YC thought that this
was good enough to get in, then,um, then there must be some
validation to it.
Now, most startups fail right,and that's the thing we've got
(11:11):
to understand in this categoryis the most likely outcome is
that if you just invest in onecompany, it's going to fail.
Ahmed, I mean we had a at ourevent.
We have an AltAsset Summit thatwe do every year.
By the way, it's October 16thand 17th everyone
(11:38):
AltAssetSummitcom in Scottsdale,arizona this year.
But we did one in California,in Southern California, two
years ago, and we had a speaker.
She was the president of TechCoast Angels.
They do a lot of angelinvesting.
I remember one of her commentswas if you invest in 10 startups
and this is as an angelinvestor, but this is going to
(11:59):
be early stages the most likelyoutcome of nine of them will
fail and maybe one makes it.
But your hope is that that onethat makes it goes 100x and it
delivers a significant return.
I mean, for someone that's newto investing in venture and
startup, how should someonethink about that and what's
their expectation going in?
(12:20):
And I know you have the fundmodel too we can talk about here
but just as they're thinkingabout individual company
investing and how should theylook at this asset class, I
think there is a different wayto look at startup investing
than Silicon Valley doescurrently.
Yeah.
Speaker 2 (12:41):
There's a certain naivety that comes with being an
angel investor in the Valley,but I think the advice I usually
give to people is likediversifying your financials and
your investments.
If you're going through yourIRA and you're picking, x amount
(13:02):
goes to government bonds, xamount goes to real estate, x
amount goes to ETFs.
I personally put in 5% of myinvestment over the years.
Over the year, uh, to go tostartups, and I probably could
increase it because I haveinsider knowledge and that is my
job.
So I I'm yeah.
Speaker 1 (13:23):
Invest in what you know Exactly.
Yeah, like I invest in whereyou know.
Speaker 2 (13:28):
I totally believe the amount of capital that goes
into these private companies andthe timeline for these
companies to go public being somuch longer than it ever has
been before.
We recently saw Figma's IPO.
Cerebrus' IPO has been, it hasgone through, but it's been
delayed so many times.
(13:49):
Companies like Databricks isplanning to IPO so many times.
Companies like Databricks isplanning to IPO.
Anthropic just raised theirnext series B, I believe Sorry,
series C.
They're going to take some timeto IPO SpaceX.
God knows when they IPO.
Companies are staying privatelonger.
There is more money than hasever been before in these
(14:13):
private markets.
I do think people are missingout on money if they just rely
on public markets.
Speaker 1 (14:22):
Yeah.
So if I'm going to invest inthat asset class, though, should
I be thinking of a fund modelthen?
Because if I need to diversify,I mean I'm diversifying within
all asset classes, I guess byputting someone to real estate,
someone to stocks, someone tobonds, you know whatever the
typical advisor advice would be.
But if, like, all right, well,I'm going to put 5% into venture
(14:46):
, let's say, like, how do I dothat?
I mean, this is what we funders, like you've kind of like have
solutions for this and making iteasy, and like smaller amounts.
But also, what if 5% for me is,you know, 250,000, like you
know?
But I don't want to just buyone company at that amount, you
(15:07):
know so.
So how do I start figuring thatout, how to invest in that?
If I'm interested in that assetcategory and I want to start
doing it, what are my options todo that?
Speaker 2 (15:13):
Yeah, so we have different asset classes or
different ways you can invest on.
Wefunder in RIGD, primarily theOrange Funds, is a good way to
diversify, but it's still verynarrow in terms of how many
companies are in an Orange Fundor in those funds.
Usually it's around 26 to 30.
Okay, all right and YC onlyaccepts tech companies, and if
(15:35):
you think that's like a lack ofdiversification, there are other
ways to go about it.
Um, but the orange fundsusually return around 30 irr.
Uh, so I do think they're likea good class to diversify.
The amount of the differentcompanies we get or like are
very random when you look at itin three months time.
Yesterday I had a call with abiotech company.
(15:57):
The day before I had a callwith a drone company that maps
how much bale and hay a farmerhas collected.
I think that's the true natureof diversification.
But in general, we havedifferent funds.
I launched a biotech fund a fewmonths back called helix, and
(16:17):
that was primarily just ways toaccelerate research and anything
that goes through fda testing,just accelerating that process.
Um, we are are planning tolaunch an ai fund, a national
defense fund, a, a robotics fund, and those are different asset
classes that people could beinterested in From historical
(16:41):
research and context.
People that invest in thesespecific funds tend to have
specific domain knowledge inthat technology.
So we get a lot of requests forthe biotech fund and that just
happens to be the people thatare trying to request for it are
doctors and they believe thatthey know what they're looking
(17:05):
at and they want somethingthat's closer to home, so
they're specifically asked forthat.
Other people don't want to dothe research on AI and it moves
so quickly and new companiesspawn every other day and
competitors become obsolete.
People win Um, and they don'twant to have to keep up with
(17:25):
that, but they know that isgoing to be the future.
So they're just like someonelike me to just grind through it
and understand the market.
So they want that asset class.
So I'd say, if you're trying todiversify and you're a WeFunder
investor trying to invest inReg D, I would look at one of
the funds and invest your moneyin that.
(17:46):
However, I would keep an eyeout on the individual deals that
we get.
We usually average around two amonth.
Those are the open AIs, theAnthropix, the SpaceX and, if
you like, said company, and Ithink those companies are big
enough where there's enough datafor you to make a decision on.
Speaker 1 (18:06):
I would save some money for those Right now on
your guys' platform.
I could invest into SpaceX oropening Anthropic.
Speaker 2 (18:16):
We run rolling funds where they're only open for
around two weeks at a time forthat specific company.
We closed Anthropic around twoweeks ago and that was open for
three weeks.
Um.
We before then we did anotherXAI round, um.
So what we do is when a roundbecomes open, we get an
(18:38):
allocation.
We'll send it out to the peoplethat are have invested in the
funds before.
First they get early access andthen after that we open it up a
little bit more before we getoversubscribed again and people
usually have a timer of twoweeks to fund their investment
and then that's all theinvestments we're taking in.
Speaker 1 (19:01):
Okay, are those individual investments typically
?
Are those reg CF typically,since they're not in a fund
model?
Or are those those, any of theReg D or those are all Reg CF?
Speaker 2 (19:12):
They're Reg D.
Speaker 1 (19:14):
They're.
Speaker 2 (19:14):
Reg D.
Speaker 1 (19:14):
Okay, those are Reg D Okay.
Speaker 2 (19:16):
Those are Reg D.
If you want to invest in anycompany currently on Reg CF, you
can go to WeFunder and then onour Explore page.
You don't have to be accreditedon that.
There are, I think, over 180companies currently open for
investment.
Speaker 1 (19:34):
Okay, so all right.
So let's say I've determinedthe amount of money I want to
invest and maybe I even want touse my IRA.
Of course you can do that withyour account here at directed
IRA.
You can invest in venture andstartups.
You can use we fund or we'vehad many accounts invest in that
.
I think we'll see more and moredo that as this asset class is
becoming more accessible, Ithink, to individual investors,
and I think that's one of themissions that WeFunder has done
is try to bring this asset classto individual investors instead
(19:57):
of just the wealthy SiliconValley or the venture firms.
I know there's a lot of peoplewho like to kind of follow other
prominent firms and investmentsand I've seen this on WeFunder
too to see who else is investedin this.
You guys typically willindicate if there's been a
well-known venture firm orsomeone else that's invested in
the company, and I think that'sa nice thing to know right, kind
(20:21):
of like this follow the leader,maybe type model, but what are
those things people should lookat?
You maybe talk about that orsome other things when in when
they're analyzing thesedifferent opportunities to see
what's a positive or a negativething I should look at and I get
there's different asset classesand things.
Invest in what you know inthose categories you like.
But what should other peoplemaybe be paying attention to is
(20:43):
they're looking that you guysmight have show in the diligence
docs or kind of information forthem to digest.
Speaker 2 (20:50):
I think there's two different distinctions there.
So Reg CF companies arerequired to file a form C.
You get a bunch of it.
You get a lot more informationthat's legally mandated to be
there.
So if you're raising up to fivemillion, you have to file an
audit.
If you're raising up to 1.25million, you have to file a
(21:11):
financial review, so you getaccess to their financials,
which is big for RECCF companies, for startups, it doesn't
really matter that much becauserealistically, you're not
investing, yeah it's a bunch ofzeros.
You're not really investing inthere.
Oh wow, they made 30 grand ofrevenue this year.
What you're investing in therelike oh wow, they made 30 grand
(21:36):
of revenue this year, uh, right,what you're investing in is
particularly the founder um.
And I think that's what a lotof people get wrong.
They put a lot of emphasis onthe company's current traction
and the current product stateand they don't look at the
founder um.
Yeah, an analogy I give isParker Conrad, who was the
Zenith founder, then turned toRippling.
He was regarded as the bestfounder some people have met in
(22:05):
terms of just sheer ambition anddrive.
And if you looked at Zenith atthe time that they started so I
believe they were winter 13, youwould have not invested in them
if you were basing it offtraction and current product
state.
But if you had no idea what hewas building and just had coffee
(22:25):
with him for five minutes, youwould have maybe sunk your life
savings in him.
And it's harder to do whenyou're looking at stuff on
WeFunder because you can't callthe founder, but there's enough
that you can get in watching thefounder video If it's a venture
funds investment, look upYouTube videos on the founder.
(22:49):
We'll show videos on the profilewhen we're looking at pages and
their current traction,obviously, and like the product
state.
But what I mostly look for isdoes this person have an inkling
of what it takes to be the nextMark Zuckerberg?
And that's something that SamAltman has like repeatedly said
he looks for at startups and Ithink that's the biggest
(23:11):
differentiator.
Speaker 1 (23:12):
Yeah, I mean you're you're investing in the person
as much as you are in their idea.
Right, they've been their ideaor their product or concept or
company.
I mean the person that's goingto execute that.
You're investing in that asmuch as anything else.
I totally agree with that.
So, all right, so I can maybesee maybe some other you know, I
know you guys will probablysome detail.
There's been some like marqueeventure investors that have
(23:34):
invested um, look to who thefounder is or maybe there's some
co-founders involved to try toget a feel for them Obviously
understand the vision of whatthey're trying to create.
Is there a big you know?
Do you see that breakingthrough?
And you know you have to useyour own judgment on this.
This is, of course, this is thefun part of the investing.
You know is able to make thosetypes of decisions and analyze
(23:56):
that for yourself.
And, of course, we're not givinginvestment advice here at all.
That's not our role.
We're not giving investmentadvice.
I don't think you're doing thatat WeFunder For us.
We're just trying to provideaccess with your IRA to invest
in what you know and what youbelieve in and to take control
of your retirement account funds, and I think places like
(24:18):
WeFunder are a great place to gobecause they're providing this
opportunity for everybody.
It's not just you have to getthe right connection or you have
to even be uber wealthy.
You can even, through these regCF offerings, it's open to
everyone to have some type ofallocation, even if it's 250
bucks, as we talked about, intoventure or startups.
So any other words of advicefor people as they get on
(24:42):
WeFunder or they're looking atventure startups that you'd want
to point people to?
I don't know if there's anygetting started.
Stuff sounds like registeringto get information when you are
like, let's say you're like, oh,I want to get the next xai
allocation or the next.
You know, you know what is the,because there's notices.
Speaker 2 (25:01):
I guess you're sending out on that to people on
the platform yeah, um, ifyou're interested in just
joining we funder as a likeinvestor to invest in reg cf or
reg d?
Um, that's really easy.
Just go to we fundercom?
Um and then you can sign up toget access to the accredited
deals.
(25:21):
You have to set yourself as anaccredited investor as you sign
up through the flow, which issimple to do?
Um, and then the way we likenotify people is just through
email, so please make sure youread the emails you read your
emails when they come from uh,me, uh or we've under uh, but
(25:42):
yeah, um, awesome.
It is easy to invest, and that'sthe entire.
We're not giving investmentadvice.
The only job I have, and I'mstriving for, is to allow anyone
to have the same level ofaccess as a Silicon Valley
insider does.
Speaker 1 (25:59):
Awesome.
Well, I love that.
Thanks so much for coming onand sharing this.
Where should we send people to?
Just to the main page?
Is there any place we shouldsend them?
Any getting started place orjust get to the main homepage.
Speaker 2 (26:11):
Yeah, wefundercom slash home Good place to start.
If you guys want anyinformation regarding connecting
your directed IRA account toWeFunder, feel free to shoot us
an email.
Speaker 1 (26:22):
We're happy to help Cool, all right, okay, we'll put
that information in the shownotes and provide that links.
Ahmed, thanks for coming on.
Thanks for everyone tuning in.
We'll be back next week withanother incredible Directed IRA
podcast.
Until then, stay calm.
Self-direct on.
Speaker 3 (26:36):
And thank you everyone for listening.
A quick disclaimer and reminderthis presentation does not
constitute an attorney or CPAclient relationship and it is
always in your best interest toconsult competent legal and tax
professionals when conductingyour own personal transactions.
Speaker 1 (26:52):
We also want to make sure you know this is not
investment advice or financialadvice.
We're just trying to give youeducation, ideas and strategies
you can take to yourprofessionals or conduct your
own research on.
We'll see you next time.
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