Wefunder: Leading the Growth of a New Industry

Abstract

In early 2018, Nick Tommarello could be proud of what he and his partners had accomplished. Their company, Wefunder, Inc., was the acknowledged leader in the equity crowdfunding industry, an industry that he and his partners were largely responsible for creating. Wefunder served as an online portal for crowdfunding investments and had raised more money for more companies than any of their competitors. Yet, Nick’s pride and satisfaction with these accomplishments were tempered by the knowledge that neither his company, nor the industry as a whole, had achieved the volume and size he had originally projected. Wefunder's careful vetting of the companies allowed to raise money on its site had created a reputation for quality, but the labor-intensiveness of this model was limiting the company's ability to scale up for growth. And the restrictive conditions imposed by federal law and the Securities and Exchange Commission’s regulations on equity crowdfunding seemed to prohibit models of doing business deemed essential for the growth of the industry as a whole. If these challenges could not be met, Wefunder might well end up as one of many fish competing in an unfortunately small pond.