How Crowdfunding Helps Diversify Investing

The investing world has been and remains largely white and affluent. Investing dollars continue to primarily go to companies owned by white, male founders. But there are a growing number of companies working to diversify who is investing and who receives investments, including Wefunder. Wefunder is a crowdfunding platform, a certified B Corporation and a Public Benefit Corporation.

Recently, I spoke with Jonny Price, Director of Fundraising at Wefunder, as part of my research on purpose-driven businesses to learn about how his company is working to make investing and receiving investments more accessible for a broader range of stakeholders. Below are some highlights that didn’t make my Forbes article.

Marquis: Why do you think that being a B Corporation and Public Benefit Corporation is important?

Price: Being a Public Benefit Corporation means when the going gets tough, we are legally mandated to uphold our Public Benefit Corporation charter rather than maximize shareholder value. And I think that legal obligation helps to safeguard our integrity and intentions. I trust our founders greatly, so I would actually trust them even if we were a C Corp. But I think the fact that we're a PBC helps keep us on track. And on B Corp certification, it has a marketing role, it's a signal to our community. People are generally more familiar with the B Corp logo, but for me the PBC’s legal incorporation structure is what actually has the impact on mission.

Marquis: With crowdfunding, a company could potentially have hundreds of investors to communicate with and answer to on company directives. How do you manage the relationship between a company and its many investors on your platform?

Price: We use an SPV structure. We roll individual investors up to one line on the cap table, and then a lead investor votes for the shares of the individual investors. I'm biased, but I think the way that we have set up this investment structure is the most elegant solution in the Regulation Crowdfunding sector. The lead investor helps to negotiate the terms of the offering at the outset, and gives investors representation and protection through their voting proxy.

The lead investor is putting in, on average, $25,000. If it's a larger campaign, it might be $50,000 to $100,000. Then the terms that they negotiate with the founder, we hope, will be more in line with the market, which is then obviously better for the investors. And also better for the founder, bceause they will be more likely to run a successful campaign, and raise the money they need!

Read the rest of our conversation on Forbes.