Entrepreneurs and small businesses are the linchpins of every community. Not only does their work benefit local economies, but their drive and motivation help provide important services that are enjoyed by local communities on a regular basis. According to the U.S. Small Business Administration, small businesses created 9.6 million new jobs between 2000 and 2018 — almost twice the amount made by big businesses. Despite this, the Bureau of Labor Statistics reported that 20 percent of businesses fail in their first two years, whether it be from lack of funding, inability to adequately gauge the marketplace, absence of a realistic business plan, or ineffective marketing.
That statistic may seem daunting, but successful entrepreneurship isn’t a lofty, unachievable goal as some may believe. Anyone with an idea, ambition, and passion can start their own business. Keeping it going requires financial support, and lack of access to funding is one of the biggest reasons early-stage businesses fail. Enter WeFunder stage right.
How big of an issue is funding?
For many small business owners, especially those just starting out, financing and building stable revenue is difficult, especially when it comes to startups with new products and services. There are a few options for financing such projects: loans, crowdfunding, and personal savings. In addition, crisis-related assistance like the Treasury Department’s Payroll Protection Program issued around $10 million for small business funding to continue paying employees during the pandemic in 2020.
According to a February article from CNBC, only two percent of businesses closed due to COVID-19. However, only 26 percent of businesses had three months of cash readily available, which is often considered the minimum amount for safe, sustainable functioning of a business.
As more people are vaccinated and businesses increase their capacity again, WeFunder is connecting founders and small businesses looking for capital with capital providers looking for investable ideas. Where websites like Kickstarter allow users to donate to fund products or businesses, WeFunder provides an opportunity for users to invest in new companies, with the possibility of earning a return if the startup proves to be profitable.
WeFunder was founded following the passage of the Regulation Crowdfunding law in May 2016, with the hopes of breaking down class barriers that allowed only accredited investors, or rather, the already-wealthy, to invest in new businesses.
Support businesses you care about
Unlike the investment strategies of Wall Street and the stock market, WeFunder discourages investing in new companies with the sole interest of making money. Due to the risky nature of funding startups, the company encourages users to invest in companies and products that they feel strongly about. According to their website, they suggest that investors support businesses solely for “the personal fulfillment we get from helping a founder take ‘their shot’ at making our world a slightly better place.”
One notable example of a start-up with passionate business proposals funded through WeFunder includes Hempitecture, which aims to increase sustainability and reduce the amount of carbon dioxide in the atmosphere. Another example is Quioveo, a Black, immigrant-led enterprise that aims to increase access to and ownership of sustainable energy sources, especially in marginalized communities. Further, PharmD Live, a woman-led business, seeks to mitigate the number of deaths from adverse drug reactions by increasing access to personalized care coordination.
These examples don’t fully encompass the sheer scale of businesses helped by WeFunder. For example, CurlMix is a natural hair and skincare company dedicated to providing beauty products for historically underserved communities, specifically women of color who typically spend more than their white counterparts on beauty products.
While they encourage investors to support their chosen businesses, WeFunder is entirely transparent about the risks associated with investing in small businesses and products. They honestly state on their website that users are more likely to lose their funds or wait several years to see a return on their investment. This is why they stress the importance of investing in companies and causes that users are passionate and confident about.
Promotion of diverse businesses
This website provides a platform for investing in a multitude of businesses and business types. For example, some notable business types funded through the website include entertainment, restaurants, biotechnology, and mobile apps. Investors can find their ideal business to support, while owners can reach their target audience to help obtain business funding for their idea.
For start-ups and small businesses, access to funding has been a problem for a long time, and even though there have been improvements they have been very slow. When it comes to funding, it’s important to consider who is receiving funds and why. For example, women-owned businesses make up 39 percent of privately-owned firms in the United States. However, the Harvard Business Review reports that female entrepreneurs only received 2.3 percent of venture capital funding in 2020 — a number which was considered an “all-time high.”
Access to funding is such an issue, in fact, that WeFunder is crowdfunding to help maintain their own platform through Honeycomb. The company published that it is “still in its early stages, and significant additional time and resources will be required for research and development,” showing the importance of the service WeFunder provides in allocating the necessary funds for startups to be successful.
Crowdfunding and investment companies like WeFunder allow entrepreneurs to market their skills and ideas to those who feel passionately about their specific cause. As such, when it comes to startups focused on saving the planet, or increasing accessibility, or providing opportunities for marginalized groups, they don’t have to feel worried about going unnoticed in an incredibly competitive market. The opportunities that these entrepreneurs provide for their communities cannot be understated, and these investment platforms allow communities to give back to these businesses for the invaluable services they provide.
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