Superpowers for Good
Superpowers for Good: Empowering Changemakers for Social Impact via Regulated Investment Crowdfunding from the SuperCrowd.
Revenue-Based Financing Is Friendly to Both Social Entrepreneurs and Impact Investors - s11 ep09

Revenue-Based Financing Is Friendly to Both Social Entrepreneurs and Impact Investors - s11 ep09

Wefunder Exec Justin Renfro Shares Some of the Advantages of This Simple Debt Structure for Small Businesses

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Devin: What do you see as your superpower?

Justin: I believe my superpower is kind of rooted in authenticity. My friends get the same Justin as my colleagues, as the entrepreneurs that I work with. I wear my heart on my sleeve.

“Wefunder kind of coined this term ‘community round,’” explains Justin Renfro, the director of revenue-based financing at the popular investment crowdfunding portal.

“We want to simplify the fundraising process by orchestrating all the legal, all the compliance, all of the operations around fundraising and allow founders to fundraise from a broader group of people,” he says.

One key to that objective is a new emphasis on revenue-based financing, which is especially relevant for smaller, impact-focused businesses. Justin explains:

Revenue-based financing is a new financial instrument for founders to be able to raise capital. The way it works is they offer a multiple to investors; for simplicity's sake, let's say a 2X multiple. So investors are going to put in a thousand and get $2,000. 

The way in which an investor realizes that multiple is through small quarterly payments of a percentage of revenues. Again, for simplicity purposes, let's say 5 percent of revenues. So, an entrepreneur pays 5 percent of their quarterly revenues until investors have realized a stated multiple of two X.

In this framework, it's very friendly because it's not a fixed payment every month. It's based on the progress of the business. If the business is going well, investors get paid back faster. [If] the business goes slower, investors get paid back slower.

The advantages of this structure go beyond being easy to understand. A debt structure's legal and tax burden tends to be simpler than for an equity round of financing.

Justin’s time at Kiva informs his work at Wefunder. He remains focused on social impact. He says his authenticity, his pattern of wearing his heart on his sleeve, is his superpower.


AI Episode Summary

  • Devin Thorpe hosts the Superpowers for Good Show, and his guest is Justin Renfrow from Wefunder, a crowdfunding platform.

  • Wefunder is focused on helping impact companies raise funds through innovative financing structures.

  • The community round, a term coined by Wefunder, allows startups to raise funds from a larger group of people, simplifying the fundraising process.

  • Wefunder encourages the use of revenue-based financing as a new financial instrument for founders to raise capital.

  • Revenue-based financing offers flexibility and a variable payment based on the progress of the business, shifting the focus from equity and future exit events.

  • Wefunder also simplifies the legal and compliance aspects of fundraising, allowing entrepreneurs to focus on growing their businesses.

  • Debt deals on Wefunder are attractive for impact companies as they do not require revenue or profitability and have tax simplicity.

  • Investing on Wefunder allows smaller investments and a diverse portfolio of impact startups for individuals who cannot afford large angel investments.

  • Justin's experience at Kiva, particularly working with microloans in the US, influenced his passion for supporting entrepreneurs.

  • His superpower is authenticity, showing genuine interest in others and building personal connections, which has positively impacted his personal and professional relationships.

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How to Develop Authenticity As a Superpower

Justin shared the story of how he used his authenticity superpower:

Wefunder has a really cool policy that every three years, we get a three-month sabbatical—my sabbatical hit about a year ago. I decided to go out into the desert alone for almost three full months. And I just wrote, wrote and wrote. I wanted to write a book. I didn't know what the book was going to be about. And. I kind of put my whole personality on display. This is who I am. This is what I'm about. This is my perspective of the world. 

I sent the book to a lot of people that I've worked with professionally, to friends, just sharing who I am with a broad group of people, sharing my pains, sharing my challenges, sharing what I'm optimistic about, sharing my perspective of the world.

I learned a lot about myself being out in the desert for three months, and writing pretty much is my only activity other than hiking. So, I think that [authenticity] was one of my main takeaways. I think that came out in the book. It's something that I was very proud to share with the people I've worked with and the people in my personal life as well.

Justin recognizes that genuine authenticity can create vulnerability and acknowledges that it isn’t for everyone. Still, for those who would like to lean into it, he shared some insights for strengthening it as a skill.

First, he suggests that you remember that building genuine relationships helps build business. “I trust that if I share who I am and I show genuine interest in who you are, and we build a personal connection, the business will naturally follow.”

So, he notes, for business development folks like him, authenticity is a sales tool.

Second, he highlights the fact that you can and should start with the easy stuff. “It doesn't need to be a deep dive into your deepest, darkest secrets. It's like, I want to know what you do for fun. Start there.”

By following Justin’s example and advice, you can strengthen your authenticity, potentially developing it into a superpower that enables you to do more good in the world.

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Guest-Provided Profile

Justin Renfro (he/him):

Director, Revenue Based Financing at Wefunder, Wefunder

About Wefunder: Wefunder (PBC) is an investment platform that helps startups raise capital.  Wefunder’s platform allows founders to raise from their friends, family, customers, and community, with a mission to democratize startup investing.  We’re driven to help more founders take their shot.  To date, we’ve helped over 2,000 founders raise over $600M in funding. 


Twitter Handle: @wefunder

Biographical Information: Justin Renfro is a leading expert in early-stage fundraising. He currently leads Revenue Based Financing at Wefunder, a new initiative designed as an alternative to banks and VCs. 

Justin has mentored hundreds of startups and captured top insights about fundraising.  These insights include pathways to secure funding, the mindset of successful founders, and how to raise money from the crowd.

Twitter Handle: @JustinRenfro11

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For the September SuperCrowdHour, I’m going to share some of the lessons I’ve learned from making dozens of crowdfunding investments and talking to hundreds of entrepreneurs and investors. You’ll learn not just how to make investments via crowdfunding but how to make money doing it.

Many impact crowdfunding investors focus on impact first. I admire the approach but note that a goal for maximizing impact is best accomplished by making money. It works two ways. A company that goes out of business has no impact after it dies. One that grows profitably can do unlimited amounts of good. Furthermore, if the investment delivers financial results to you, you can reinvest and do more good as an investor!

If you’re focused primarily on making money, you’ll find this session helpful, too. We’ll discuss maximizing financial returns. Don’t miss it!

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Superpowers for Good
Superpowers for Good: Empowering Changemakers for Social Impact via Regulated Investment Crowdfunding from the SuperCrowd.
We host changemakers who are using regulated investment crowdfunding for social impact--impact crowdfunding--as impact investors or social entrepreneurs, catalyzing change with leadership skills we call superpowers.