It seems StartEngine’s investment into their recent venture, StartEngine Collectibles, has paid off!
StartEngine launched many of the first Collectibles offerings about a year ago today. The first to launch was a series of wines that managed to sell out in a matter of a few MINUTES. There were only a few offerings, each looking to raise roughly $5000–10,000 each, but it was off to a good start. After that, several more offerings launched, and now StartEngine just announced they have raised as much as $1.65 million in 2022 alone. This isn’t counting the hundreds of thousands raised in 2021 either, so the total number is probably respectably higher. I personally estimate about $2 million, but I can't confirm that personally.
This is not only an incredibly strong showing but incredibly promising for StartEngine. I don’t think of this as an extension of StartEngine necessarily when gauging the success of this venture. Rather, I think it’s important to look at this as a separate entity and gauge it by those metrics. Meaning that in its first year of operation, StartEngine Collectibles likely had roughly $2 million+ in gross investment volume, which likely resulted in about $300,000 in revenue upfront, not including any potential revenue once the assets are sold. Obviously, SE Collectibles had a headstart being apart of StartEngine, but those are still incredibly strong numbers for the subsidiary's first year in operation. Like any new product, there is a large education curve that StartEngine needs to overcome, and as information becomes more clear and apparent, then it will continue to grow. These offerings are some of the highest grossing products that StartEngine has because they take 15% revenue upfront for a sourcing fee, then another 20% on the back end once sold. Comparatively, they only make 10–12% on Reg CF campaigns and as low as 5% on certain Reg A campaigns. This also doesn’t take into account revenue supplement on these offerings from trading on Secondary, assuming StartEngine can get the platform up and running consistently.
That $2 million could also result in several hundreds of thousands of more revenue on the backend. For example, if they were able to sell each offering for double the initial investment price, that would result in another $800,000 in revenue. This means on $2 million raised, they could bring in revenue of as much as $1.1 million plus any revenue brought in from trading on Secondary. That means they product revenues of as much as 55% of any amount raised.
While the $1.65 million is great, I think they could easily double that volume every year for the foreseeable future with relative ease. After that, Secondary will continue to grow, and sales of assets will be consistently happening. This means this could easily grow into a large enough revenue stream to rival that of their Reg CF and Reg A platform fees relatively easily. All around, it’s actually incredibly promising growth and definitely a smart call on StartEngine’s part to hone in on this service.
I also think many investors are overlooking this service. Since these Reg A's tend to go on for several months, there have been a number of instances where the current prices of the assets being offered actually exceed the value. In other words, you can invest in offerings at a lower valuation than they are actually worth, even after StartEngine takes out its sourcing fee. Further, as the market pulls back, sports memorabilia, for example, has only continued to grow astronomically.