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Social-media startups target a new set of investors: their users
- Social startups like Diem and Spill are allowing users to invest in their platforms through WeFunder, a crowdfunding tool compliant with SEC regulations.
- Diem's community round started in February, set to close in May, while Spill will launch its own community crowdfund in March.
- WeFunder enables a larger number of smaller investments into startups, similar to angel syndicates, with each community investor represented as a single line on a startup's cap table.
- Users can invest in Diem starting at $100 and in Spill starting at $250, providing them with ownership stakes and potential future returns if the companies succeed.
- Crowdfunding rounds on WeFunder often accompany traditional venture capital investment rounds, offering startups an additional means of fundraising.
- Investing through WeFunder gives users a Simple Agreement for Future Equity (SAFE), ensuring potential stock ownership if the startup goes public or gets acquired.
- Diem and Spill offer various perks to investors, such as exclusive events, badges, and access to new features, enhancing user engagement and loyalty.
- The current landscape of social media, with users seeking alternative platforms due to changing policies, is driving the decisions of startups like Diem and Spill to crowdfund.
- Other platforms like Substack and Beehiiv have also utilized WeFunder for fundraising, emphasizing user involvement and sharing the upside of success with the community.
- Startups like Fanbase have used platforms like StartEngine for crowdfunding, further democratizing the investment process and engaging users in supporting social network innovation.
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