Wefunder is one of the leading equity crowdfunding platforms, which has listings of many of startup companies to invest in. Note that the minimum investment is often as low as $100.
This type of investing is fairly new. In 2016, the Regulation Crowdfunding law came into effect and essentially allowed anyone to invest in startups. Before this, you had to either be an institutional investor or very wealthy.
Despite this, the risks of this type of investing are significant. For the most part, many early stage companies fail. And even when there is success, it can still take a long time to get liquidity from an investment. This is why investors should do their own analysis and research. Additionally, investors should also be considering the diversification of their portfolios.
But then again, if just one company takes off, it can certainly mean hefty returns.
OK then, so with WeFunder, what are some of the interesting companies? Well, let’s take a look at three:
Companies to Invest in: Payroll4Free.com
The name of the company says it all: Payroll4Free.com. Yes, this is essentially an online service like Automatic Data Processing (NASDAQ:ADP) and Paychex (NASDAQ:PAYX), which are successful multibillion dollar companies.
Then how does Payroll4Free.com make money? First of all, it does provide a premium offering, which ranges from $10 to $20 per month. However, its main revenue source is advertising, which is incorporated into the software. No doubt, the small business market is an attractive category for brands to get access to. It’s also important to note that the owners of these types of businesses do the payroll themselves. In other words, the advertising is highly targeted.
The Payroll4Free.com service is available in all 50 states and there are over 2,700 customers, with revenues at over $15,000 per month. But the addressable market is large. There are 25 million businesses with fewer than five employees and less than 1 million of them use a payroll service.
Among the companies to invest in for Wefunder, there are a variety that focus on artificial intelligence. Just take a look at SapientX. The company develops software that provides voice recognition for other products.
While Apple’s (NASDAQ:AAPL) Siri and Amazon’s (NASDAQ:AMZN) Alexa are great systems, there is still much to do. Yet SapientX sees this an opportunity and believes that its platforms offers more accuracy, the ability to understand 40 languages and the protection of user privacy. The technology also does not need to have access to the Internet. The reason is that SapientX is a hardware system. As a testament to the technology, the company has been able to snag mega customers like Mitsubishi Motors (OTCMKTS:MSBHY), Volvo, Yamaha (OTCMKTS:YAHMF) and Indian Motorcycle.
For this year, SapientX expects revenues to reach $500,000 and then to go to $49.7 million by 2023. And yes, the market opportunity is massive. The company forecasts it will reach $7 billion by 2025.
Digifox is a personal finance app — available both Apple’s iOS and Alphabet’s (NASDAQ:GOOG, NASDAQ:GOOGL) Android — that offers higher interest rates, allows for the seamless purchase of cryptocurrencies (over 14 available) and makes it easier to send payments across the world.
The founder and CEO is Nicholas Merten, who also developed DataDash (this is the largest YouTube channel for cryptocurrencies, with more than 343,000 subscribers). He started Digifox because of his frustration with managing his own finances using existing apps.
The business model is straightforward. The company takes a 1% charge for any lending or borrowing activity and 0.49% for trading. Although, so far, Digifox has not generated any revenues.
Until now, Merten has self-funded the operations. But as for the crowdfunding campaign, he has raised more than $280,000 from over 380 investors and the valuation is $18.1 million.
Tom Taulli (@ttaulli) is an advisor and author of various books and online courses about technology, including Artificial Intelligence Basics, The Robotic Process Automation Handbook and Learn Python Super Fast. He is also the founder of WebIPO, which was one of the first platforms for public offerings during the 1990s. As of this writing, he did not hold a position in any of the aforementioned securities.