WeFunder Crowdfunding Platform Penetrates European Market
WeFunder, a leading crowdfunding platform that enables people to invest in startups, has announced its expansion into the European market.
“I'm excited to announce that Wefunder is now live in Europe,” said Nick Tommarello, founder & CEO of WeFunder, on Thursday.
With this move, WeFunder has become the first platform in the United States that is authorized to now operate in the European Union (EU). Right from the first day of its launch, the company has had more startups live in the EU than all our competitors combined.
This is a significant development for the company, which has been operational in the US since 2011. WeFunder allows accredited and non-accredited investors to invest in early-stage companies in exchange for equity.
Through its crowdfunding platform, WeFunder allows enthusiastic investors to support up-and-coming ideas with as little as $100 with the hope of earning a return on their investment.
Instead of investing in companies listed on the NASDAQ or the New York Stock Exchange (NYSE) that have grown too big, WeFunder allows people to invest in startups at a much earlier stage with tons of growth potential in the future.
This potential for profit and the ability to help a project succeed makes a crowdfunding platform like WeFunder a popular option for investors and founders alike.
Expanding into Europe is a natural next step for WeFunder, and it comes at a time when the European Commission is looking to boost its startup ecosystem. WeFunder will be able to tap into this growing market and provide much-needed financing for European startups.
The European Launch Cohort
Starting now, WeFunder will be offering investors and founders in the EU the opportunity to connect and collaborate on projects in a way that was previously not possible.
While people with great ideas will be able to find the funding they need to make their projects a reality, investors in the EU now have the chance to get in on the ground floor of some amazing projects. A dozen startups have already started raising on the platform, which can be browsed here.
WeFunder's European launch cohort will be located in Denmark, Spain, Portugal, Germany, and the Netherlands. The cohort will have the backing of top-tier European funds like Breega, SpeedInvest, and Goodwater Capital. The launch cohort will also be backed and founded by serial entrepreneurs from prominent EU scale-ups like N26, Tier, Casper, Blinkist, and many more.
The European division of WeFunder will initially be composed of five team members, with more people to be added as the company scales up. The company's EU effort is headed up by one of WeFunder's longest-serving team members, Katie Powers, with assistance from Adrian Parlow, the company's General Counsel, now the VP of Corp Development.
“We're a big believer in the power of small, very fast-moving teams to open up a new market,” said Tommarello.
The Regulatory Landscape
The platform's EU expansion plans have been in the making for about two years and are now finally coming to fruition.
In its official announcement, Tommarello shared that it has been a very long process to get the European regulators on board with WeFunder's structure, which allows one entry on the cap table for startups and is compliant with EU laws.
Throughout this time, the WeFunder team was involved in a massive effort to rework the company's backend to work with multiple regulatory jurisdictions, languages, and payment systems.
When discussing the regulatory landscape of the EU, Tommarello shared that it has been difficult to break into the European market until now because each country has had its own securities regulations. And this made it unattractive to expand to Europe, given the complexity of complying with 30 different sets of laws.
However, this is changing, with the European Union and the EEA unifying laws from these 30 countries into one common framework. This has made it easier for companies to expand into Europe, creating an addressable market roughly equal to the United States. However, there is still no local EU platform with any significant traction, and this is where WeFunder comes in.
A Large Common Market Opportunity
The EU's regulatory regime might make it tough for platforms to enter its big market. However, it presents a big opportunity, with the combined GDP of the EU roughly equal to the US. This doubles WeFunder's long-term addressable market.
Additionally, the changes in laws have made handling it roughly the same as the United States, making it better for WeFunder's growth in many ways.
This is a big opportunity for startups as well, as they can choose to raise funds both in the US and EU concurrently through WeFunder. This way, WeFunder can also work with more startups around the globe.
Most importantly, the EU doesn't have dominant platforms that cater to its investors and founders. The most well-known platforms are from the UK, which has joined this race to enter the EU market. It includes Seedrs, which is not yet authorized to operate across the EU, and Crowdcube.
These two names, however, are nowhere near WeFunder, with the crowdfunding platform having 12 startups live in the EU compared to Crowdcube's one startup in the region and Seedrs' none. However, both Crowdcube and Seedrs have been active in the UK for a decade, and WeFunder aims “to quickly close this gap.”
This lack of competitors gives WeFunder a massive edge as the first platform to launch with a built-in advantage. Not to mention, WeFunder believes it can easily “beat the current players on the product.”
“Founders want to go to the platform with the most funding; investors want to go where the best and most startups are. This is why we believed we couldn't afford to wait,” said Tommarello about capturing this early-mover advantage in the EU.
That's not to say this expansion hasn't been challenging. According to Tommarello, Europe is more complex than the US, with each country being a sovereign nation with its own laws, languages, and cultures. Additionally, European startup investing is less developed, presenting risks and opportunities.
Despite these challenges, WeFunder is ready to tackle them head-on and build on its success in the US.
Replicating the Tremendous Success
WeFunder has already succeeded in the US, with over $500 million raised on the platform. So far, WeFunder has helped more than 2,300 founders raise funds for their ambitious ideas, and these startups have raised a whopping $5 billion in venture capital after WeFunder.
The company has actually been titled the number one platform by the 2022 Investment Crowdfunding Report. This achievement came despite the fact that the year was a roller coaster characterized by supply chain shortages, hyperinflation, soaring gas prices, market volatility, rocketing interest rates, and the war in Ukraine.
While Investment Crowdfunding also felt its effect, deal volume still hit record levels within this sector as over 320,000 investors deployed nearly half a billion dollars into 1,100 deals.
In a year where investors took a step back and were equally experienced in Investment Crowdfunding, WeFunder emerged as a winner.
“Wefunder was the online investment platform leader by deals, number of investments made, and capital,” said Sherwood Neiss, Principal at CCA. “They helped deliver $164.1 million by 88,000 investors to one out of every three funded deals. An impressive feat.”
WeFunder is now looking to replicate this success in Europe. With a growing number of startups and a strong appetite for investment, WeFunder is well-positioned to make a big impact in the European market.
The company is already noticing “very early signs of a recovery in 2023,” but of course, growth is expected to be slower before the market can return to normal.