Re:Raising Money Online – Advice for Startups
by pclstyle on Thursday September 01, 2016 @08:07AM
(#12404584)
From a Wefunder post[1] about RC: "However, with these protections, in the very worst case scenario, a venture capitalist firm ideologically opposed to a “messy cap table” (even though there are no voting rights) can simply repurchase the crowdfunded securities during the deal."
What does that last bit mean, regarding "repurchase the crowdfunded securities"? Do smaller investors run the risk of losing their shares entirely during a later-stage deal with a VC that wants to clean up the cap table?
[1] https://blog.wefunder.com/founders-the-strengths-and-dangers...
Re:Raising Money Online – Advice for Startups
by npt4279 on Thursday September 01, 2016 @04:32PM
(#12408647)
Smaller investors run the risk of being repurchased for fair market value at the time of the re-purchase.
The Fix Congress Act being debated in Congress may solve this problem.
Re:Raising Money Online – Advice for Startups
by wehadfun on Wednesday August 31, 2016 @05:12PM
(#12401517)
What relationship did the companies have with the investors
Re:Raising Money Online – Advice for Startups
by npt4279 on Wednesday August 31, 2016 @05:19PM
(#12401571)
Typically, the investors are the startups own customers. For our most successful $1m raises, we estimate over 70% of the funds are their own community.
This makes sense. One good signal of whether you should invest is whether you love the product.
Re:Raising Money Online – Advice for Startups
by api on Thursday September 01, 2016 @12:22AM
(#12403087)
My biggest concern would be ending up with a crazy cap table. When a crowd SAFE converts does the entity stay consolidated?
Re:Raising Money Online – Advice for Startups
by npt4279 on Thursday September 01, 2016 @04:23PM
(#12408581)
We created a special SAFE that won't convert until IPO or acquisition.
Re:Raising Money Online – Advice for Startups
by api on Thursday September 01, 2016 @05:25PM
(#12409008)
Ahh... so it stays a single entity until the company is large enough that having a ton of shareholders doesn't matter.
That's clever.
We recently closed $1m each for three different companies. Here are our stats: https://wefunder.com/stats