Community is Cool
Startups are hard. Investing in community, and inviting your community to invest, makes them easier. And more fun.
Ryan: “It wasn’t personal.”
Michael: “Business is always personal. It's the most personal thing in the world.”
The other day, I woke up at 5am, thinking about community.
I drew two conclusions from this. Firstly, it’s probably about time I take a vacation. Three month sabbatical. Box checked. Secondly, I should write a blog post about community, and how that word has intertwined with my career arc over the last 14 years. And here it is.
Community at Kiva U.S.
I joined Wefunder in 2018. Before that, I founded and led the U.S. team at the non-profit Kiva.org. We crowdfunded microloans for entrepreneurs throughout the United States — from small family farms in rural Arkansas, to barbershops in inner city Detroit.
We made 5,000 loans during the seven years I worked on the Kiva U.S. program. $25 million disbursed, at an average of $5,000 per loan. Deep impact. Expanding access to capital for small business owners that even other non-profit microlenders wouldn’t extend loans to. We grew the program every year. And did it with a really small team.
But the part of the Kiva U.S. story that I remain the most proud of was our Net Promoter Score survey results. The last month I was there, we had an NPS score of 100. That means that when we asked our borrowers (entrepreneurs) how likely they would be to recommend Kiva U.S. to a friend or family member on a scale of 1 to 10, literally every survey respondent rated us a 9 or a 10.
But even cooler than the numerical scores were the answers to the question “What did you like most about Kiva?” So many of our customers (small business owners) mentioned the word “community”, or feeling supported by our Kiva team, and their overall experience.
I included a screenshot of the responses in my Kiva U.S. leaving email (sent right after I was fired by Kiva’s new CEO — but that’s a story for a different blog post. English people really are the worst!!!). And here it is again:
I’m really proud of this screenshot.
I talked about community a lot at Kiva. My team actually made fun of me for how much I incessantly talked about it. But I think good leadership is a lot about incessant repetition. I think good leadership is a lot about incessant repetition. I think good leadership is a lot about incessant repetition. I think good leadership is a lot about incessant repetition.
And these NPS responses tell me it worked. Our team lived this value of community. Everything we did — from how we spoke to entrepreneurs, to how we prioritized product features, to how we marketed the Kiva U.S. program, to how we encouraged borrowers to market their loans — was with “community” top of mind, front and center. And our customers felt it. And loved it.
Community at Wefunder
After (unceremoniously) leaving Kiva, I joined Wefunder in early 2018. And once again, I find myself working towards a more community-oriented financial system.
Beautiful example — in 2022, we rebranded “equity crowdfunding” (yuck!) to “community round” (yay!), and launched communityround.com.
Earlier this year, my colleague Justin made these Wefunder sweatshirts, so now I can literally “wear” community all day long!
One of my favorite things about working at Wefunder is a Slack channel that we have for every investment made on the platform. Many of these investments also include a note from the investor, to the founder, about why they invested.
Here are 10 from the last 24 hours:
“Love what the app does today and still so much more opportunity to go. Excited to be along for the ride and happy to be helpful in any way!”
“I believe in your product and the two of you.”
“As a 2x founder myself, I was lucky to have a couple of great exits and I'm looking for great founders to support.”
“Because I believe in Tracy Held! She's very talented, compassionate and does what she says! She cares about the people and the world and can multi-task like no other!”
“Love your technology!”
“Love the idea and interested in having my own!”
“Just a single millennial mom ready to ride to the mountain top like a lady boxer wearing goat.” (OK…)
“I believe in HEVO, soon this will be really important for mankind.”
“As Claude knows, my father, Donahue Goins, played Black Five basketball. I applaud Claude for all that he has done to bring recognition to these basketball pioneers and look forward to the success of this venture.”
“My wife had two kinds of cancer about six years apart and passed away in 2021. I was found to have prostate cancer, which had spread to my spine. I am cancer free after three years of treatment. I allocate a portion of my investment dollars to developing cures for a number of diseases, including cancer.”
This was an incredibly wonderful conversation with Tyler Hayes, the founder of Atom Limbs, who has raised two successful community rounds on Wefunder. In it, he shared two powerful insights, which are relevant here:
Firstly, fundraising “conventionally” — e.g. from VCs — feels like “no”. Even when you successfully close your round, you hear “no” a lot more than you hear “yes”. But, according to Tyler, raising a community round on Wefunder “feels like yes” — because hundreds (in Tyler’s case, thousands) of people invest in you, encourage and support you.
Secondly, raising on Wefunder is about finding people that “share your crazy”. Tyler is building better prosthetic limbs. One of his investors, Steven Child, wrote: “I am a veteran, and want your company to help other veterans who have lost limbs.” These people — who share your crazy — can be the community around your startup. And if they are invited to become investors and owners, that community becomes even stronger.
Wefunder (and community rounds) are community applied to capital.
We’re both a more community-oriented approach to raising capital…
…And a vehicle for strengthening community around a startup — during and after the fundraise.
Community is Valuable
So far it all sounds very warm and fuzzy. Kum-ba-yah-round-a-campfire type stuff. Which is nice. But not enough.
But thankfully for Jonny, Wefunder and Team Community Round, a more community-oriented approach to raising capital isn’t just about the vibes. It’s also about tangible economic value.
In this Arrived case study, their team notes that their customers that invested in their Wefunder community round were 3.9x more active on the platform after they invested, vs. non-investors.
Wefunder enjoyed a similar effect. Except for the 6,700 Wefunder investors who have invested in us, it’s been a 5.5x increase.
Warren Buffett famously said “show me the incentive, and I’ll show you the outcome”. If you let your customers share in the financial upside, they are incentivized to help you realized that upside. I expect Buffett would be a fan of his portfolio of companies raising capital from their customers.
I recently chatted with Niles Lichtenstein, the founder of Nestment, for our Adventure Capital podcast. In that conversation, I shared with him his Wefunder “investor community” page. After we ask investors if they would like to leave a note for the founder they just invested in, we ask them how they might be able to add value for them in the months and years ahead. Nestment is a platform working in the real estate space — to get more people on the housing ladder. This is a glimpse of three people in their investor community (out of hundreds):
This “investor community” product feature is a great example of how Wefunder is leaning into community as central to everything we do.
Our sales pitch is that startups are hard. And building stronger community around them can make them a little bit easier, a little more resilient.
Capital is not a commodity. VCs can “add value” by taking a board seat. (Or detract value from that same board seat). But your customers and community — the Wefunder allocation of each fundraising round — can “add value” as well, in the form of “spending more money with you”, or “telling more friends about you”, etc. etc. etc..
That sales pitch won’t land for every founder. Firstly, you might not want to build stronger community around your startup. And secondly, you might not agree that allowing your community to become owners will strengthen that community.
But we have high conviction that building community around startups is valuable, and that an incredibly powerful way to do that, is by inviting your community to invest.
In the not too distant future, it’s going to be the default expectation that if a startup is committed to investing in their community, they will let their community invest in them, alongside some VCs.