Wefunder Fees Explained 2021: How Does Wefunder Make Money?

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Wefunder is by most measures, the largest startup investing platform for non-accredited investors. With over 1.6 million investors and 500+ successful fundraises, the platform makes up over 40% of the startup crowdfunding market.

The platform is available to virtually all investors and extremely accessible given their simple interface and $100 minimum investment.

However, many investors wonder how Wefunder makes money and what fees they’ll need to pay in order to invest on the platform. In this article, we’ll lay out all of the Wefunder fees as well as any hidden costs to show you exactly how much is costs to use this platform.

If you want to learn more about Wefunder, read our full Wefunder review.

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How Does Wefunder Make Money?

Similar to most other investing platforms, the Wefunder business model revolves around fees.

There is no upfront cost to use the platform for either investors or startups. However, each investment you make will likely incur one or more fees.

Wefunder Fees Explained

On the Wefunder platform, both startups and investors foot a portion of the bill for fees. In general, a larger percentage of these fees will fall on the startup, but the investors still have fees to pay as well.

1. Payment Processing Fee

Investors on Wefunder have a number of different options when it comes to funding an investment on the platform. They can choose from a physical check, ACH transfer, wire transfer, or credit card to bring money into the platform.

Most commonly, investors will select either an ACH transfer, wire transfer, or physical check.

For all three of these payment options, there is a 2% payment processing fee that investors will pay. This covers Wefunder’s cost of accepting the payment.

The payment processing fee has a minimum of $8 and a maximum of $100.

So for an investor making the minimum investment of $100, they will pay an $8 fee. Additionally, an investor making a $10,000 investment will have their fee capped at $100.

2. Credit Card Fee

As one would expect, there is a higher fee for investors purchasing their investment with a credit card. This is a result of the higher cost Wefunder faces to accept credit card.

Most other startup investing platforms do not accept credit cards at all so the fact that Wefunder does is certainly a differentiating factor.

Investors will pay a 3.5% payment processing fee when making an investment on a credit card.

There is no minimum or maximum for the credit card fee. However, there is a maximum investment size on a credit card of $5,000 so given that, your fee will never be greater than $175.

These are the only fees for investors and there are no other hidden fees that Wefunder charges.

Wefunder Active Offerings

3. Platform Fee

In addition to the fees paid by investors, startups will also have to cover a 7.5% platform fee. This goes towards the maintenance, marketing, and upgrades to the Wefunder platform.

Although investors do not pay this fee directly, they should be mindful of it. This is because startups factor this cost into their fundraise.

For example, if a startup raises $200,000 on Wefunder, they pay a $15,000 platform fee. They are factoring this fee into their raise amount and in all likelihood a portion of your investment will go towards paying this fee.

In general, this platform fee is comparable with other startup crowdfunding platforms like StartEngine.

Keep in mind that this platform fee only applies to Regulation Crowdfunding raises. For all raises covered under Regulation A+, there is a different fee for startups.

4. Regulation A+ Fee

While most of the raises on Wefunder fall under Regulation CF due to the simplicity and lower costs, there are a number of larger Reg A+ raises on the platform.

Instead of paying the 7.5% platform fee, these companies will pay a flat $375,000 fee for raising on the platform. This amount was chose because it is 7.5% of $5 million.

Regardless of how much money a company raises under Regulation A+, they pay Wefunder $375k.

What If The Startup Doesn’t Reach Their Goal?

Given the wide selection of startups available on Wefunder, there is a good chance that many of them will not meet their funding goal.

If a company does not meet their funding goal before the campaign ends, all fees paid by investors are returned to them. Additionally, startups only pay the platform fee after a successful raise, so if they are unsuccessful, they will not pay either.

In the event of an unsuccessful campaign, investors will also receive their full investment back.

For example, say you invested $1,000 on StartEngine, and paid a $20 payment processing fee. If the startup did not reach their funding goal, you would receive back your entire $1,020.

Wefunder Fees: Final Thoughts

Compared to other popular investing platforms, Wefunder certainly offers a reasonable fee structure. A 2% payment processing fee to cover the cost of accepting payments and a 7.5% platform fee are right in line with their competitors.

Additionally, there is a guarantee for startups that if they find a better deal elsewhere, Wefunder will match the lower fee.

So even though the platform is the largest, they are still committed to offering competitive rates for both investors and startups.

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