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What Is StartEngine? Everything You Need To Know About This Leading Equity Crowdfunding Platform

Here’s what you need to know about this leading equity crowdfunding and startup investing site.


StartEngine wasn’t the first equity crowdfunding portal, but it’s quickly becoming one of the biggest. They have had some massive raises on their platform, with StartEngine itself raising as much as $29 million in their most recent raise and several clearing the $20 million mark. Similar to some of my previous reviews and some upcoming ones, I wanted to break down the pros and cons of some of the most popular equity crowdfunding platforms.


What is StartEngine?

StartEngine, like several others, is an equity crowdfunding platform that helps everyday investors invest in startups. It utilizes the JOBS Act to open up various types of equity crowdfunding campaigns, is also a registered broker-dealer, has an alternative trading system license (ATS), registered transfer agent, and more. I note this because they provide a number of services to both startups looking to raise and investors that aren’t typical of many other startups.

For example, as I will get into below, they have “StartEngine Secondary,” which is one of only a few “startup stock markets” in the world. This allows you to actively buy and sell shares in startups. This is important to note because startups are traditionally incredibly illiquid, which forces people to hold for years. Secondary allows people to potentially offload their shares in much less time.

As well they have several other integrations of services, like being a broker-dealer for private securities and a registered transfer agent, so they are said to be rolling out “StartEngine Accounts” soon, which means people hopefully need to own shares across several different transfer agents soon. This will be good for investors and companies alike and simplify many of the processes.


Is StartEngine Legit?

This is what most people are generally worried about when they first discover StartEngine. The answer is Yes! StartEngine is completely legit. While there are plenty of risks involved in startup investing, there is quite a lot of vetting that goes into companies before they are listed, and each raise is qualified with the SEC. There are still good and bad investments on the site, but there is nothing fraudulent or sketchy inherent in the site or industry itself.


Pros:

  • Only uses Debt & Equity

  • Secondary Liquidity

  • Collectibles & Diverse Offerings

  • Later stage offerings / Good Success Rate

Only uses Debt & Equity

This is one that I like personally because many of the other options aren’t great. Republic, another leading platform, often uses SAFEs and various crypto-related offerings, and the crypto offerings have consistently done terribly. In fact, every single crypto offering they have done has resulted in +90% losses or more. SAFEs, which are heavily used by both Republic and Wefunder, have various clauses in them that I don’t personally trust. One example is the company's ability to liquidate your position upon subsequent funding and issuance of ‘shadow shares’, among other issues.


Debt and Equity have baked in protections to them that are there for specific reasons surrounding investor protections. For example, boards of directors have fiduciary duties to corporations, and if they breach those duties, shareholders can sue. As a SAFE owner, you don’t get these protections because you don’t own stock in the company. If they go bankrupt, you don’t even have any claims to the residual assets and a host of other issues.