StartEngine is an open platform that provides anyone with the opportunity to invest in a variety of start-ups or receive uncapped direct funding for their startup.
With StartEngine, start-ups have the freedom in how they choose to raise funds for their business. Stakeholders and investors also have the opportunity to trade within the same interface, and the platform is open to everyone, with an investment minimum set at $100.
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Service |
StartEngine |
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Founded |
2014 |
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Investment Type |
Equity crowdfunding, Seed funding, Venture funding, Regulation crowdfunding, Regulation A offerings, Regulation D offerings, All types of start-ups and early growth companies. |
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Sectors |
Renewable energy, Infrastructure, Commercial real estate, Banking, Robotics, Sport, Transportation, Pharmaceuticals, Automobile, Retail, I.T, Fashion |
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Minimum Investment |
$100 |
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Audience |
Open to all investors |
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Investor fees |
$0 |
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Due diligence process |
Professional compliance and pre diligence checks |
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Securities offered |
Common stock, Convertible note, debt, and Revenue share |
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Investor Resources |
Company documents, Company’s website blog, and research section |
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Pros |
● Detailed and easy to navigate platform ● Low investment minimum of $100 ● Accessible to anyone interested in startup investment ● Offers a large pool of opportunities to build an investment portfolio ● Freedom for founders to raise around $75million per year ● Owners bonuses for shares |
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Cons |
● A higher share sell on fee for StartEngine secondary than other competitors ● 3.5% fee for some startups is higher than other competitors charge ● High investment risk is involved |
Types of investments StartEngine offers
While StartEngine offers you the opportunity to invest in startups, it helps you to develop a solid portfolio of investments that cut across different industry parallels with potentials for massive financial gains.
Ideally, investments in StartEngine are for early-stage startups, but you may also invest with businesses that got funding on StartEngine and returned to raise another round of investment for their business.
The platform allows you to choose from two investment paths, both of which follow similar steps in order to raise capital, but vary in specific business requirements and financial objectives.
The regulation crowdfunding and the regulation A+ path are the two options available to anyone interested in investing with StartEngine.
StartEngine has built for you the perfect audience base to raise a seed round investment, grow your business, and go all the way to raise your series C and beyond – all on StartEngine.
For a company founded in 2014, StartEngine had raised $115M in 2019 and went on to double that figure in 2020, this shows that growth is inevitable with the financial systems put in place by the StartEngine team.
Important StartEngine features you should know about
Payment:
You can always purchase an investment through credit card payment, ACH, wire transfer or cryptocurrency as most companies on StartEngine accept these methods of payment.
International investors can only pay through credit card or wire transfer.
All StartEngine users are required to open an investment account, this account is a part of, but separate from your StartEngine account.
Your funds and assets in your investment account will be held by Prime Trust LLC in Las Vegas, United States.
Lead Investors:
These are people with active investment in a fund-raising company, who also second as an intermediary between the company and other investors.
Between investors, they usually have a higher share of the company’s profits and are therefore motivated to participate in ensuring the success of that company.
While they help represent the interest of other investors in a financial arrangement, they also offer advice, connections and brilliant market suggestions to protect their investment and have a better chance of success for the startup.
Various investment structures:
StartEngine offers 3 different types of investment opportunities, first of which is Regulation A+, this offering is offered to non-accredited and accredited investors alike. The goal of regulation A+ is to help businesses raise capital in excess of $5M, it takes about 6 months to launch and costs anywhere between $50,000 and $75,000.
The regulation crowdfunding is designed to help small businesses raise investments to the tune of $5M only, it is offered to non-accredited and accredited investors alike. The regulation crowdfunding takes anywhere between 4 and 6 weeks to launch and at no or very minimal upfront cost.
Then there is the regulation D offering which is only open to accredited investors, has no cap on how much can be invested
Diverse investment opportunities:
A unique feature of the StartEngine platform is the wide range of investment opportunities available to investors. There are opportunities in artificial intelligence, robotics, virtual reality, transport, commercial real estate, the list goes on and on. With a responsive filter setting, you can streamline your focus on the niche that holds your interest and explore the world of possibilities in that business parallel.
Referral program:
The StartEngine scout program allows you to refer a founder and earn $5000 when they launch. Even better, the company gets $1000 to use on their marketing campaign.
Social platform:
Upon accessing the StartEngine website, you are immediately in touch with a large pool of companies and startups that have raised funding through the platform.
You are able to access each company based on your specific requirements and finances to decide which company represents the best chance of success for you.
With detailed explanations, videos, pictures and data showing each company’s blueprint for success, you are fully armed with top tier information to make the best overall decision for your investment.
Investment portfolio:
Once you begin investing on the StartEngine platform, you have a section in your profile that details the nature of the companies you’ve invested in. Stating very clearly how much you’ve invested, required updates and actions that you may have to take.
What do you get when investing with StartEngine?
A greater percentage of offerings on StartEngine is common stock, although some companies may choose to raise capital through convertible notes, debt and revenue share.
However, it is important to note that StartEngine does not recommend or approve any securities offered by companies on the platform. This is solely the responsibility of the issuer of such securities.
You are encouraged to conduct a background check and do your due diligence before taking up offerings by companies on StartEngine.
How does StartEngine make money?
StartEngine makes money in a variety of ways, these include trading, owner’s bonus and equity.
From trading alone, StartEngine earn revenue from the StartEngine Secondary marketplace by taking a 5% selling fee when investors sell shares through the marketplace.
Another way StartEngine makes money is through the owners bonus built into the platform, this is an annual subscription that investors can purchase for $275/year to enjoy access to 5 exclusive perks which includes earning bonus shares when investing in participating campaigns, discounts on StartEngine Secondary, and more.
The next is equity, you see, StartEngine has invested in many companies that raised funds through the platform. StartEngine takes about 2% of what companies raise in the securities offered to investors. This means that if a company raises $150,000 selling common stocks to investors, StartEngine would take $3,000 in common stock at the same terms as the investors on the platform.
Potential returns and cash flow
There are a number of companies that have successfully offered dividends to initial investors.
TerraCycle for instance, raised just over $6M in 2020, has issued its first dividend at approximately 4.5% of the initial investment done in may 2021.
While an IPO is the dream of most investors on StartEngine, there hasn’t been a massive billion-dollar exit yet, but there have been several OTC listings already.
The breadth of offerings on StartEngine
With over 200,000 investors, StartEngine has racked up over a hundred deal flows, sitting pretty on top of the pile as the number 1 crowdfunding site in terms of deal flows, ranked second in terms of capital raised from deal flows, reaching more than $20M in 2019 alone.
Unfortunately StartEngine does not do any due diligence on the companies displayed on their platform, and as such you may have to conduct your own background research into a company before choosing to invest with them.
Regulatory framework and due diligence expectations
StartEngine Capital, LLC (“StartEngine Capital”) is a funding portal registered with the US Securities and Exchange Commission (SEC) and a member of the Financial Industry Regulatory Authority (FINRA).
StartEngine Primary, LLC (“StartEngine Primary”) is a broker-dealer registered with the SEC and a member of FINRA/SIPC.
StartEngine Primary LLC facilitates two types of offerings, those made under Regulation A and Regulation D. StartEngine Capital LLC only facilitates Regulation Crowdfunding offerings.
Intending investors have direct access to the fund-raising company to ask about specifics of the deal before making a decision on whether to invest or not.
Conclusion
It’s important to finish with your honest opinion on the website and its offering
Although I do not have any investment with StartEngine, and having gone through a ton of reviews to understand the platform, it is clear that the platform is a leader in many important metrics that potential investors and startup founders consider before choosing what platform to work with.
Having raised so much in startup capital from an impressive number of deals, it would be wise to pitch with and choose to invest in a platform such as StartEngine.
This does not in any way take from the fact that investments in startups are very risky as you should have to do your own due diligence in understanding the background of founders and startups before choosing to work with them.