Dealflow is arguably the most important aspect of startup investing and equity crowdfunding for platforms. Higher-quality startups mean fewer bankruptcies, higher returns for investors, more money raised for founders and platforms and an overall happier community. Where platforms like StartEngine and Wefunder had relatively relaxed standards to raise on their platforms, that is no longer the case. Now, less than 1% of applicants that apply launch on the two top platforms.
The reason behind this likely has to do with profitability. StartEngine and Wefunder both take a fee based on the percentage raised for their platforms. If they raise $100,000, a 5% fee is only $5,000. On a $5 million raise, they are raking in tens of thousands of dollars. This shift also likely wasn't possible before, but many of the top VC-backed companies in the world are now applying to raise on equity crowdfunding as venture capital funding drops off a cliff.
Wefunder previously gave referrers a $2500 bonus if your referral launched on their platform with a $2500 fee discount. And StartEngine gave anyone referring a startup $4,000 once the company launches on the platform. Now, both platforms are giving founders up to $10,000 paydays to people that refer founders to these platforms.
When will you get paid?
StartEngine is pretty simple: Refer a founder then get $10,000 once they launch. This can take a while so it's certainly not immediate, but actually quite simple and incredibly generous. StartEngine profits about 13% based on total amount raised, and the average amount raised on StartEngine is about $400,000 in the first month. Their low acceptance rate and high raise amount means they make about $50,000 in the first month per raise, hence why they can offer this hefty bonus.
Wefunder's is significantly more difficult. On Wefunder, you get paid once the company files the Form C and goes live. But in order to get that $10,000 referral, the company must:
Raising/ed a Series A or later round
WITH top-tier investors (has $500M+ fund w/ $300M+ valuation or a seed investor in a unicorn) already committed (and willing to publicly state so)
AND have 100k promotional “reach” (customers, social media, email list, etc) if B2C or 10,000 if B2B
AND have a Community Round goal of $2.5M+
There are several tiers to this, but unless you have a "top-tier" investor or a startup doing over $5 million revenue run rate, you're looking at a $1000 bonus with a $1000 discount. This is, I believe, actually lower than their previous deal of a flat rate "Give $2500, Get $2500." The $1000 bonus is "all other deals," meaning this is the most likely outcome.
Looking To Raise on StartEngine?
With these new $10,000 checks being handed out, if you're a startup looking to get started raising on StartEngine, you can click here to get started raising. If you get approved, let me know, and I will invest $5000 in your company once you're live.
How To Get Started Referring on StartEngine and Wefunder?
For anyone looking to get started referring, it's very quick, easy and simple. First, you just need to make an account on either platform, then click the links below and follow the steps.
For StartEngine, signup then follow the steps here: https://www.startengine.com/scout
For Wefunder, signup then follow the steps here: https://wefunder.com/rewards