Marvin Abrinica is not alone in starting his career at Procter & Gamble. But since leaving in 2015, he has had an incredible breadth of experiences – founding a branding firm, Esoteric Brewing Co – an Asian and Black-owned brewery, and Wunderfund, an equity crowd investing platform.
Raising capital is always a topic of interest in Cincinnati startups, so we sat down with Marvin to learn a little more about equity crowdfunding in general and what he and his team are up to at Wunderfund.
Tell me a little about how you came to found Wunderfund. I used to mentor for accelerator programs like Brandery, Uptech, Mortar, and 500 Startups, and even invested in a handful of them. As I got to know the Midwest ecosystem, the same theme always came up: many strong companies, yet not enough capital. Access to capital is problematic, especially amongst Midwestern, minority-owned, and women-owned entrepreneurs. Let’s face it; fundraising is an exercise of “Who you know.” So, it tends to favor those with the privilege of having wealthy connections. We just can’t assume that Black, Hispanic, and women-owned entrepreneurs have those connections. Ultimately, that’s how I started Wunderfund, to level the playing field to enable founders and investors to come together in a public market.
What is equity crowdfunding? Is that the same as Kickstarter? Equity Crowdfunding is a form of public investing in startups by pooling together many small amounts to fill a funding round. On Wunderfund, a company can launch its own online public offering or an OPO, which is like a mini-IPO. Unlike traditional crowdfunding, your contribution is considered an investment in the company, and you get shares and not just a t-shirt or mug. You can also write a check as little as $50, and you don’t have to be considered an accredited investor. Importantly, this creates a level of economic inclusion for people who’ve historically been excluded from investing in private deals; they get a chance to earn the same returns that angel investors have been privy to for years.
What kind of companies use equity crowdfunding to raise capital? Why do they use this approach instead of Venture Capital? We accept all types of businesses on our platform- ranging from tech companies, consumer products, restaurants, breweries, real estate, and healthcare. The rule of thumb is that the company should be at a stage where they’ve generated sales, or at the very least have a prototype of their product. Companies like to raise money this way because it allows them to market the deal broadly to all investors, and they’re not limited to just accredited investors. For instance, when you launch a public offering, you can advertise the deal on Linkedin, Facebook, Twitter, and even host your own public event online to pitch your company broadly. When it comes to Venture Capital, we’ve seen them jump alongside our investors as well. In other words, it’s not one way or the other. In fact, the SEC just announced changes that will harmonize fundraising rounds so that your equity crowdfunding seed round dovetails nicely into Angel & VC series rounds. Our platform enables the formation of capital at each round so it’s done virtually.
How do investors get involved? Are there some criteria to invest? Anybody can invest by creating a profile at wunderfund.co, and they can invest as little as $50 in some companies. The maximum investment limit is based on a simple calculation of annual income or net worth, and the standard is 5-10% of that calculation. In comparison, angel groups and venture capital firms, usually ask for a $25,000 or $50,000 minimum buy-in to participate in their private deals. The fact that equity crowdfunding deals have such a low buy-in is why as many as 15% of angel investors use funding portals like ours to source deals that they can spread their bets on.
What are your plans for the company? It’s a straightforward vision & mission. We aim to fuel the moonshots & fund the dreamers in underserved markets. That includes the midwest & south regions of the US. Equally as important, we’re also aiming for minority, Black-, Hispanic-, and women-owned companies. Our goal is to launch 100 deals in the next 18 months. To do this, we’ve set three goals: First, we’ll complete our own funding round for Wunderfund’s expansion & growth this year. Second, we will launch a dedicated healthcare portal as part of a joint venture with a private equity firm in early 2021. Finally, we will launch & raise capital for WUNDERFUND VC by mid-2021. This will enable us to exclusively invest in deals so long as they go through the portal successfully.