Product-market fit is a spectrum
For founders (and investors), community rounds as a product have significantly improved over the last few years, and will continue to do so.
Product-market fit is usually spoken of as binary. "You either have it or you don't". But in my experience, it's more of a spectrum.
When I joined Wefunder in 2018, my job -- persuading founders that it's cool to let their customers invest in their startup, as well as VCs and angels -- was really hard. Startups could only raise $1M on Wefunder. And we couldn't roll investors up to a single line on their cap table. Ouch. Very few legitimate, venture-backed (or backable) startups had raised capital through "equity crowdfunding". Which was still called "equity crowdfunding". We hadn't invented the term "community round" yet.
But every year, things have gotten easier and easier.
In 2018, we had 140K users on the platform to put founders in front of. Now we have over 2 million.
In 2019, we didn't have ApplePay or GooglePay to allow investors to invest on a mobile with the click of a button. Now we do.
In 2020, our operational processes, and founder-facing tools were rudimentary at best, and completely broken at worst! Now processes are a lot smoother, and our product is a lot more sophisticated.
In 2021, the SEC rolled out significant improvements to the Regulation Crowdfunding laws. Instead of $1M per year, startups can now raise $5M per year on Wefunder. And we can now roll up investors to 1 SPV on the company's cap table. Thanks to "Testing The Waters", companies can launch a Wefunder raise in a couple of hours vs. a couple of weeks, or validate investor demand before committing to launch publicly.
In 2022, we rolled out the term Community Round (and the website communityround.com). We've always hated the term "equity crowdfunding". Firstly, it sounds like Kickstarter -- which is cool, but not what we do. And secondly, "crowd" funding sounds un-prestigious. Raising from your community sounds cool. Who doesn't want to build stronger community among their users?
Over the last few years, more and more venture-backed startups have started to run community rounds on Wefunder, as part of larger, VC-led rounds. Companies like Arrived, Beehiiv, Levels, Mercury, Replit, Substack. Not because they needed the money. But because they thought it was cool to let their customers invest. That it would delight their users, strengthen their community, and accelerate their growth.
Perhaps most importantly of all, our Wefunder team is stronger now than at any point in our history. And in our NPS survey responses, when founders articulate what they liked about their Wefunder experience, so many of them reference the people of Wefunder. Wefunder's product is its people. So if our people have more experience and expertise now than they did 5 years ago, Wefunder's product is better too.
These are a few examples. But there are hundreds more.
Since 2018, when I joined Wefunder, our product has improved every year. It will continue to do so going forward.
Wefunder is a marketplace, with strong two-sided network effects. The more awesome founders we have on the platform, the better the product for investors (more cool companies for them to invest in). The more investors we have on the platform, the better the product for founders (more people for them to raise capital from).
NPS surveys have their limitations. But we have seen consistent and significant improvement in founder NPS scores over the two years that we have been measuring them. Which is a pretty nice data-supported corroboration of the point I’m making here.
My job is still hard. Community rounds remain a small percentage of the total (VC and angel) market. But it’s so much easier than it was in 2018. In 2030, it will be so much easier again.