The *Community* Round
Too many community rounds are not leveraging, or benefiting from, well... umm... community. We should change that.
In 2022, Wefunder coined the term community round. As far as I’m aware, the term had never existed previously. We launched a website, made a (hilarious — you should watch it) video, got in a playful Twitter tiff with our competitor, and instituted a mandatory Swear Jar policy with steep fines for anyone who uttered the phrase “equity crowdfunding” ever again.
Crowdfunding sounds like Kickstarter. And Equity Crowdfunding sounds like something startups do if they can’t raise capital from professional investors. But a Community Round sounds like something you do if you are as passionate about building community as most founders claim to be, and you think it’s noble to let that community share in the upside.
Vive la Community Round!
But while we coined the term, and made the website, to-date we’ve fallen short of living up to the potential of what a community round could and should be.
So this post articulates (1) Who should run a Community Round, (2) Why they should do it, and (3) How they should go about it.
Ideal Community Profile (Who)
Let’s start at the start. Who is a community round a good fit for? Well I started my career in management consulting, so what better way to illustrate than a 2x2 matrix.
On one axis, we have “has a large and passionate community”. When Mercury or Substack launched their community rounds on Wefunder, they massively over-subscribed their $5M allocations in a few hours. If you’re Replit, you can raise $5M in a day from thousands of your users, because they already know and love you.
But on the other axis, we have “cares passionately about community”. If you want to raise $1M in a day on Wefunder, then sure, you need a huge existing fanbase. But if you’re OK with a slower, smaller raise, then you don’t need it. And you can use a community round to help you build it.
As an example here, Outerly comes to mind. When they launched on Wefunder, they didn’t have a million users. But their founder, Kay, was committed to putting community at the center of everything she did. They raised $61,958 on Wefunder, from 165 investors, and used this money to keep building. And I hope Kay would say that inviting her earliest users and supporters to invest in Outerly has helped them to grow both the size and the strength of that community.
To abstract that principle for those in the back, if you are passionate about building stronger community around your startup, you should let that community invest. In every round. Alongside the VCs (Beehiiv), before the VCs (Offline), or instead of the VCs (Wefunder ourselves).
“Value Add” (Why)
VCs are very proud of the “value they add”. By taking a board seat, dispensing pearls of strategic wisdom, or opening up their rolodex. I can’t even spell the word roller decks, but VCs have rolladockses bigger than Peter Thiel’s ELO rating. “Capital is not a commodity”, they hopefully preach.
And while legendary VC Vinod Khosla might dispute it, and very funny VC Turner Novak might meme about it, I would never dream of challenging the notion that the right VCs can add tremendous value to the right founders (when they’re not firing them).
So what’s the “value add” of a community round?
Easy. If you let your customers invest, they will be more loyal, spend more money with you, and enthusiastically tell their friends about you (more enthusiastically than before you gave them the opportunity to invest).
Maybe you love a new bourbon brand. But if you’re an investor in that bourbon brand, you’ll buy it for your brother for Christmas. And then bore him senseless with how you’re an investor over turkey.
And this isn’t just theory. After the investing platform Arrived ran their community round, they found that their Wefunder investors invested 3.9x more on the Arrived platform, compared to users who did not participate. And for Wefunder ourselves, the impact is even greater. The average user who invested in our own community rounds has made 8.9 investments for $10,400. Compared to 1.6 investments ($2,600) for the average user — i.e. a 5.5X increase in investor activity.
According to Brian Chesky, Paul Graham once told him that it’s better to have 100 users that love you, than 1 million that just sort of like you. If you let your users invest, they will love you forever.
NPS and LTV through the roof. Churn through the floor.
This is the value add of community round capital. (Well that and the fact that your customers won’t fire you, or pressure you to sell to Yahoo).
Party Round (How)
So that’s Who should run a community round. And Why run a community round. Now the last but not least: How to run a community round.
Any founder or VC will tell you that, in conventional fundraising, FOMO is critical. Urgency, deadlines, scarcity, leverage.
And I think the same applies to community rounds. Except it’s not the Fear Of Missing Out on a 1000x investment return. It’s the Fear Of Missing Out on the community, on the party. (Well OK, maybe it’s both).
The best community rounds are parties. Celebrations of the startup, the product, the founder, the community.
It’s less “here’s an 11-slide investor deck that outlines TAM to 3 decimal places, and lists out which Bachelor’s Degree each of our founding team attained at Harvard”.
And more “here’s a fireside chat with our closest supporters where we get real about the journey to-date, the challenges, and what we have in store for the future”.
In a regular fundraising round, VCs should be annoyed they didn’t get into the round. In a community round, VCs should be annoyed they didn’t get into the (literal) party.
A few examples of how to do this:
Build in public. Awesome, engaging content about the startup, the fundraise, the journey.
Long-form content — podcasts, YouTube, blogs (check out this one by Substack. Genius).
Must-have perks (so many community round perks are mindnumbingly dull).
IRL parties and events.
Exclusive access — during the community round, and ongoing.
Frame it as an opportunity to invest, vs. “an ask”.
This LinkedIn post by Fathom’s founder Rich White is where it’s at.
Or this Tweet by Beehiiv’s founder Tyler Denk.
And there you have it. Let’s put the Community in Community Round.
Who should run a community round? Founders passionate about building stronger community.
Why do it? If you invest in your community, they will help you grow more quickly.
How to do it? Community-oriented fundraising strategies, vs. “cold mass marketing”.
To see some case studies of startups that nailed this playbook, some cool case studies here.
Jonny, this is a fantastic breakdown of what makes a Community Round so powerful! Your focus on building authentic relationships with customers as investors is spot on—it's more than funding; it’s about creating a shared journey. The examples and practical tips are incredibly valuable. Excited to see how this concept continues to evolve and inspire founders to put the community back in community rounds. 👏🔥