Selecting the correct crowdfunding platforms series – WeFunder The 2012 passing of the Jumpstart Our Business Startup Act (JOBS Act) allows privately-held companies to sell equity to the public. There are many platforms available to help companies launch, host and manage their equity crowdfunding campaign. Each episode of this multi-part series will feature a different crowdfunding site explaining to Dan Humiston how their platform provides the guidance and infrastructure for companies to launch a crowdfunding campaign. They will also clarify what types of cannabis companies their platform accepts. Justin Renfro from WeFunder is today's featured guest. Produced by PodCONX Cannabis Crowdfunding - https://podconx.com/podcasts/cannabis-crowdfunding Dan Humiston - https://podconx.com/guests/dan-humiston Justin Renfro - https://podconx.com/guests/justin-renfro We Funder - https://wefunder.com/
Selecting the correct crowdfunding platforms series – WeFunder
The 2012 passing of the Jumpstart Our Business Startup Act (JOBS Act) allows privately-held companies to sell equity to the public. There are many platforms available to help companies launch, host and manage their equity crowdfunding campaign. Each episode of this multi-part series will feature a different crowdfunding site explaining to Dan Humiston how their platform provides the guidance and infrastructure for companies to launch a crowdfunding campaign. They will also clarify what types of cannabis companies their platform accepts. Justin Renfro from WeFunder is today's featured guest.
Cannabis Crowdfunding - https://podconx.com/podcasts/cannabis-crowdfunding
Dan Humiston - https://podconx.com/guests/dan-humiston
Justin Renfro - https://podconx.com/guests/justin-renfro
We Funder - https://wefunder.com/
CC WeFunder
[00:00:00] Dan Humiston: Today on raising cannabis capital. We are continuing our cannabis crowdfunding series with Justin Renfro from we funder, Justin, welcome to the show.
Justin Renfro: Thanks for having me.
Dan Humiston: I'm glad you could be with us today because we get so many questions about crowdfunding, but , I think it's important before I start. I like to always remind our audience that many of the same rulesthat govern banking also govern crowdfunding. So not every cannabis company is eligible but there's still opportunity for ancillary cannabis, businesses and CBD companies to get involved , with crowdfunding to best of my understanding, Justin, is that still the policy with Wi-Fi.
Justin Renfro: Yeah, you nailed it. That's it right there.
Dan Humiston: Okay. , those naggy federal government laws. They're just screwing everything up. Even with crowdfunding. It's really frustrating.
Justin Renfro: It is, we're going through a revolution. The roaring twenties are upon us. So, these antiquated laws will go away sooner than later
Dan Humiston: I hope you're [00:01:00] right. I hope you're right. Cause it's getting old fast that's for sure. thought we talk about both the process for new companies and process for investors, and maybe start off with companies who want to do a crowdfunding campaign on Wi-Fi. Can you walk us through the process?
Justin Renfro: Yeah.
for sure. , we work with all types of companies. We've got a broad range. So if you're on the tech side, if you're on the manual, actually the manufacturing side is the one side that doesn't really work, but pretty much any of those different kinds of channels around the flat. Or if you're a CBD company, that's totally cool.
Can qualify and raise capital businesses need to raise capital. And we want to be an open platform that hosts and allows companies to do so. It's relatively simple. There's kind of two main buckets that need to be checked in order to launch a campaign. The first is you have to put a campaign page together.
So you have a pitch video. You have your pitch deck, you have bullet points around the [00:02:00] investment, what you're raising capital for the traction to date, try and make your case for why this is a solid investment. You can go on the we funder explore page. And you can see all the different pitches and all the different types of companies that are using equity crowdfunding and get a feel for the marketing and the campaign management how It looks and how it's presented to investors.
The second bucket is the financial and legal side of the equation. And that's a big , part of the process where we have to file a form C with the sec to allow companies to raise capital from accredited and unaccredited investors. So that's really what equity crowd funding is, is being able to publicly solicit an investment in your private company and accept investments from anybody in the world that want to invest in what you're building.
So that form C is the form that gets filed with the sec. And that requires a couple of things. The first is the investment contract. So you [00:03:00] need an investment contract. Most companies are raising on a convertible note or a safe that's the typical instrument. We also do some debt offerings. So there's some interesting dialogue there, but we'll stick to equity for. So you need your investment contracts. You need 20 19, 20 20 reviewed financials from a CPA. And then there's a bunch of legal disclosure questions that are required to launch. So our team orchestrates the backend and make sure everything is dialed on the compliance and legal side. And you take charge of the campaign page and presenting your case when that's done.
You have a link, a single URL that you can share and anybody can then invest in your company.
Dan Humiston: . It seems pretty easy. I've heard that it's important to create some pre-launch momentum, like lining up investors before you start your campaign. Do you find that helpful?
Justin Renfro: Yeah. So our company has a $50,000 minimum.Anybody that's really [00:04:00] evaluating equity, crowd funding. And I think this is best practice across the board should have a real business where raising 50,000 from your own network as possible. You have investors, whether that be friends and family earlier on or legitimate investors later on.
You should be able to fill that pot and raise a minimum of 50,000. Otherwise it's an all or nothing proposition to that mark than anything beyond 50,000. , , it's important to have those early investors to come in because the more money you raise, the more promotion and exposure you get to our audience of investors.
So at the end of the day, you're generally looking at a third of the capital coming from we funder investor. Two-thirds of the capital coming from the founder and their efforts to market the fund grace. Generally speaking, a founder should be able to easily raise 50 K from their efforts in order to, seriously explore this as an option.
[00:05:00] Dan Humiston: Okay, that makes sense because if you're going to do this, you want to make sure you can at least raise 50 on your own so I think that makes a lot of sense.
I want to talk a little bit about advertising. , I'm always a little bit confused as to , how much can you promote your campaign?
Justin Renfro: Well, part of the form C filing process allows for public solicitation, so you can send and market it. However you would like there are certain guidelines around it, but more or less you can broadcast this out to the universe. There's a couple of interesting pieces around the marketing end of running a campaign.
The first is one of the coolest pieces to equity crowdfunding is that anybody can invest. So let's say you have a retail store and you can get your customers to invest in your round. You can convert new customers to be investors or existing customers to be investors and new investors will then be customers.
So there's an interesting dynamic from a marketing perspective as to, Hey, we have more pools to [00:06:00] fish out of. In terms of bringing investors into the mix. This is a big open door. So there's a lot of creativity from a marketing perspective, a very tangible example that a lot of companies utilize is paid media.
So they will run Facebook ads , to broadcast their offering out to the world and bring in new investors. Let's say you spend $10,000 on the ads to promote it to investors. Is there a turn on that 10,000, a hundred thousand in investments? If so, that's a really compelling value that you can get where it's like, Hey, this is great for marketing.
And we're seeing a great return on this investment from paying for media to go reach investors. That's a common strategy. But it's really about, you're piecing it together. I'm out talking to well investors. I've got customers in and people around my business that might be interested in investing.
I've got friends and family. I've got, we funders, community of investors. So you're fishing from a broad range [00:07:00] of different buckets. Bringing in investors and trying to create this snowball effect where it's like, Hey, this has momentum. This is exciting. This is cool. This is interesting. Lots of different ways that , you can play that.
Dan Humiston: Yeah, I'm glad you brought up those other options because I've always been concerned that you might cross a line , what I really love about the whole process is that every one of these investors really become. A customer or at least the rooting for your success.
So, , everybody that's joined, the crowdfunding campaign now , wants you to succeed, which is what can be better than that.
Justin Renfro: A good practical example is we have 5,000 investors and we funder that have funded our company today. And right now we're trying really hard to hire software engineers. That's a big focus for us as a company is to hire software engineers and build a stronger infrastructure.
And , we're promoting that to our 5,000 investors saying, Hey, do you know any software engineers help us hire? These are the positions we're hiring for. Hiring [00:08:00] is our number one, focus as a company. And we have 5,000 people that we can try and , get help, connect us to your networks, connect us to your friends.
We need to hire people.
Dan Humiston: And , that's a great asset to have with your company. And I'll, before we wrap things up, I want to talk just briefly about investors. I know a lot of campaigns that I've said, and you mentioned this earlier investors who will get convertible notes or a safe, can you explain how that works?
Justin Renfro: Yeah.
I would encourage everyone to just go tease it out. Go find a company that's fundraising on week under and invest a hundred dollars and experience that opportunity to invest in a company and invest in an entrepreneur and invest in a dream and be a stakeholder in that business. I think that's why it's so cool.
Is anybody can do that for a hundred dollars. , the practical execution is that. You make an investment in a company, you get an investment contract, you are an equity holder of that company. Now there's certain nuances around the differences between a safe or a convertible note. But I think the most important thing to understand is you can actually go and invest in, be an equity holder in a [00:09:00] company and participate in that potential upside.
These are big bets especially early stage investing. You shouldn't be putting it all , in the tank, but you can make strategic bets in entrepreneurs that you really believe in. And if they get acquired or if they exit, if they have an IPO you get in early and access that upside.
And , that's what investing is all about.
Dan Humiston: It sure is. Especially the early investors will we'll have Justin's and we funders info in the show notes. So if you're considering raising money or looking for a company to invest in, check out the website, please make sure you read everything and understand everything before you invest.
But like Justin said,check it out. Just try it becauseyou never know you might catch a tiger by the tail, Justin. Thanks for being on the show today.
Justin Renfro: I appreciate you having me. Thank you so much.