Lessons on startup investing: How do I earn a return?

Hi  In just a couple weeks Wefunder companies have raised hundreds of thousands of dollars from investors in almost every time zone! The following digest highlights a startup with new terms, others with impressive updates, and several more with a new take on food. You'll also learn how to earn a return investing in high growth startups. Also, I'm the guy who builds the company profiles and I could use your help. My mission is to learn everything about these founders, their businesses and dreams and translate those stories to you - the investors - online. I want you to feel as if you’re the one shaking their hand and asking the hard questions. What part of the profile is most important to you? What do you depend on most to make your investment decision? As always, happy investing! Best, Dylan NEW DEAL TERMS TAXA Offers New Revenue Share Bonus for Next $50k Invested In addition to holding a SAFE, early investors who commit funds to the first $200,000 of this fundraise will also receive a share of the net sales of the Fragrant Moss, capped at the amount of their investment. 287 Investors / 1st biotech investment by Y Combinator "There’s lots of bad reasons to start a company. But there’s only one good, legitimate reason, and I think you know what it is: it’s to change the world." - Phil Libin, CEO of Evernote STARTUPS WITH MOST MONEY RAISED IN PAST 7 DAYS President Obama Visited Tom's Whiskey Distillery Cleveland Whiskey was also just awarded a Gold Medal at the 2016 San Francisco International Spirits Competition and was named a Whiskey Distillary Innovator of the Year at the Berlin International Spirits Competition. 195 investors / Bottles shipped: 166,857 Mytrail Shipped Their First Products This Week My Trail is bringing back $17.5M GoLite’s best-selling products as a new brand with a new focus on sustainable growth. 53 investors / Sales began in May Hollywood Studio Partnered with Seth Green LegionM is the first movie studio owned by the fans. They've partnered with the creators of Robot Chicken to produce their first content. 362 investors / Founded by Emmy winners "Timing, perseverance, and ten years of trying will eventually make you look like an overnight success." - Biz Stone, Twitter Co-Founder STARTUPS WITH UPDATES THIS WEEK N1CE launches in Spain, Estonia, and Italy After selling 250,000 units last summer in Sweden, N1CE is expanding. N1CE launched in Estonia this week and are on track to launch in Italy to 400,000 people at the Market Sound Festival in June. They also filed two major patents in the USA. 64 investors / 76% gross margin Bogobrush: Dollar Shave Club for Teeth Bogobrush has rethought the toothbrush with a subscription model brush made from 100% recycled plastic right here in the USA. They’re doing for teeth what Dollar Shave Club did for shaving. 35% growth in May. 18 investors / 35% growth in May QMedic Has Reinvented Life Alert: $4.6M in Funding from NIH QMedic received $4.6M in funding from the NIH to bring their proactive medical alert device to market. QMedic's simple help button intelligently routes patients to the right care services. Health insurers love it because 70% of ER visits are unnecessary. 26 investors / April revenue: $138,000 Largest Online Database of Example Essays in the World There hasn't been an easy and efficient way for students to get help with their writing until Kibin. 15 investors / April revenue: $64,000 "It’s hard to do a really good job on anything you don’t think about in the shower." - Paul Graham, Founder of Y Combinator STARTUPS REINVENTING HOW WE EAT Fried Chicken & Whiskey & Donuts = Rodeo Donuts Rodeo started as a pop-up experiment and is now moving to their own location in Seattle. They combine three loves: donuts, fried chicken, and whiskey. 39 investors / Donuts sold: 45,847 Nextdoorganics Redefines the Farm Fresh Food Market Nextdoorganics is more than just a local CSA or market—it's a community hub where urbanites can buy from a growing network of sustainable small batch producers and meet the farmers behind every meal. 24 investors / Revenue to date: $2.5M Chicago Neighborhood Rebuilding as Black Food & Culture Hot Spot Urban Juncture is bringing delicious Black cuisine from across the globe to 51st Street and the CTA Green Line station, the heart of Bronzeville. Their first restaurant, The Bronzeville Jerk Shack, won "Best Jerk Chicken in Chicago." 18 investors / Raised $9M in outside funding "I wanted to help build an economy that creates, in a circular fashion, all the resources we need to sustain ourselves." - Antony Evans, Founder of TAXA Biotechnologies OUR FAVORITE ARTICLES FROM THE WEEK Hacking [Crowdfunding]: How to Raise $100,000 in 10 Days Tax Code Needs Changing to Incentivize Entrepreneurs I don’t care if you’re a CEO or a student. People deserve time and respect, and they’re worth it The Birth of Wefunder and Our Guiding Principles QUESTION AND ANSWER Question: Katherine (Whitefish, MT) asked: How do I earn a return on Wefunder? Specifically for companies with Convertible Note or SAFE contracts? Answer: Startups like any business need capital to grow - to spend on product development, marketing, and talented employees. Young companies like those on Wefunder often raise money with Convertible Note or SAFE contracts. These contracts are slightly different than buying ‘regular’ equity in larger private companies or public companies on the stock market. Startups use these contracts for two reasons. First to save on the high legal costs of equity contracts. It’s also incredibly difficult to price a startup. For instance, how do you accurately put a price on a group of smart college grads with several laptops and a great idea? So startups use both the Convertible Note and SAFE to postpone this valuation until the next financing round when they have many more paying customers, a factory, and tangible assets that make it easier to value the company. Both the Convertible Note and the SAFE give you (the investor) the right to future shares in the company at this next financing round with a bit of magic to protect everyone’s interests and sweeten the deal. The percent of the company you own is based on the price paid by the next group of investors, capped at the valuation cap (e.g. $10,000 investment / $1M valuation cap = 1%). If you invest, you are placing a bet that the company will be worth more than the valuation cap in a few years, increasing the value of your stake. If the company is successful, the value of the stock can increase with each subsequent round of financing, until the company is acquired by another larger company or goes public on the stock market. At this point, you can sell your stock and likely do very well, if they aren’t successful you may lose your entire investment. Everyone has their personal motivations for investing in startups, but ours is to support entrepreneurs we believe in, with a good chance of earning a return should that vision transform into reality--we hope you see things similarly.

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