A massive milestone for one of the biggest equity crowdfunding portals in the world
For a company primarily focused on the U.S., having over 1 million users is a pretty substantial milestone. StartEngine recently updated that they’ve raised over $650 million, which means each user invests $650 on average. Obviously, that is skewed with a smaller portion of users investing tens of thousands or more and many investing nothing at all. However, it is an interesting metric to consider because, with such a large sample group, it’s likely a pretty accurate representation of the value of one customer.
If StartEngine expects each user to invest $650, and they typically have revenue equivalent to about 12% of the total amount raised, that means they expect to make about $78 per customer currently. Obviously this will improve over time as, first, their customers hopefully actually make money and then re-invest it. Second, as they continue to accrue lifetime users. I believe they last noted that only about 1/3 of their total accounts ultimately invest. Meaning those accounts are more likely to have a significantly greater value over time and probably expect a lot more than $78 from that group (at least triple.)
As well, we could split that any number of ways with $25 million in revenue per year, meaning they can expect about $25 in revenue a year per user, etc. I would be confident to say this is one of the better monetization rates given their transfer agent services, StartEngine's Owners Bonus, and their generally high fees they take in each raise. However, this is apparently a bit lower when compared to the likes of Robinhood. By some estimates, they expect about $700 in revenue per user over their lifetime, according to some sources. That might be too high given that Robinhood, in its best years, only has as much as $113 revenue per user. (Robinhood, in 2022, has about 15.9 million active users with 1.81 billion in revenue in 2021.)
However, this does show the potential for StartEngine. Robinhood currently has 15 million people that are willing to invest, with several as much as 144 million Americans owning stock in general. This provides lots of potential for people who want to diversify and outlines the general infancy of the entire industry. 1 million is a massive number, but compared to many other financial sectors and the VC market itself, equity crowdfunding is still incredibly small. As someone that is a massive advocate of the industry, seeing the growth even in the downturn is great to see.