Not quite the killer first half we hoped for, but there might be a silver lining.
StartEngine has been relatively silent recently, and much of their financials have actually been slightly delayed. However, we just received their latest audit and word about their total amount raised. They recently announced that they raised over $100 million in the first half of 2022. For the first half of 2021, they actually raised about $120 million through Reg A and Reg CF, so there has been a slight decline in the total amount raised YoY. Some of the reasons for this are seemingly quite obvious. They have seen massively increased competition pretty much across the board, with several new platforms popping up (and some dying) and other shifts in the market. For example, many of the companies that previously had large Reg A offerings on their site have utilized companies like DealMaker to launch private raises. While there have been mixed reports to this method, some of StartEngine’s previously largest raises seem to be trying it out. Some will likely stay, while others will come back, but there has definitely been a large number of companies converting in the short term.
However, despite this decrease, there might actually be a silver lining. StartEngine’s various other revenue streams have been growing to make up for some of these shortfalls potentially. For example, StartEngine recently announced their Q1 2022 financials, and despite only 13% YoY increase in platform fees from money raised, they posted a 36% revenue increase. This was primarily driven by alternative revenue streams like an increase in Owner's bonus revenue and a slight increase in revenue from StartEngine Collectibles. This means that they could still be hitting a decent YoY increase in revenue despite a decrease in platform fees. The equity crowdfunding market is incredibly competitive right now, and StartEngine has been growing incredibly fast, so it's pretty normal that they might have bad quarters. Still growing during that time, and building other revenue streams is very important for this reason, and it seems like it might be paying off.
Another thing to consider is the deferred nature of companies raising on the platform. Companies typically don’t pay until after their raise is complete, so that can be heavily determinative of how well they do that quarter.