StartEngine Review: Should Startups Use It to Raise Capital?

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StartEngine is one of the most successful equity crowdfunding platforms on the market today. Since its inception in 2011, StartEngine claims to have raised over $500 million for startups. It boasts a community of over 760,00 investors.

Since 2016, the equity crowdfunding market has grown rapidly, with dozens of platforms hitting the market. These platforms are designed to connect startup founders with both accredited and non-accredited investors. They can be a very helpful tool when used wisely.

However, with so many options on the market today, it can be difficult to determine which equity crowdfunding platform is going to be the best for your needs. In this article, we take an in-depth look at StartEngine to determine if its features and benefits live up to its bold claims of success.

Before launching your fundraising campaign on StartEngine or other equity crowdfunding platforms, be sure to check your country’s fundraising laws and regulations. For example, fundraisers in the United States will need to check the SEC rules on Regulation Crowdfunding and on selling securities. This article is not intended as legal or financial advice. We urge you to consult legal and financial professionals for guidance as you raise capital for your startup.

StartEngine: The Beginning

StartEngine was conceptualized in 2011 and founded in 2014 by Howard Marks and Ron Miller in the Los Angeles area. The platform launched its first crowdfunding campaign in 2015. This is the year when the JOBS Act legalized equity crowdfunding in the United States.

StartEngine currently accepts only US-based startups. However, they have a network of accredited and non-accredited investors from all over the world. As of 2020, they are the 10th-fastest growing private company in California. They have successfully funded over 500 campaigns since 2015. Moreover, they have a 50 percent retention rate. This means that half of the companies on StartEngine use the platform to conduct multiple rounds of funding.

Unlike some other equity crowdfunding sites, StartEngine is a curated platform. This means that there is an application process for companies that want to use the platform. StartEngine carefully vets each startup on their platform, and they currently have an acceptance rate of less than one percent. However, the site accepts campaigns in a wide variety of industries ranging from tech to entertainment to healthcare and much more.

When selecting startups for their platform, they look for companies that have a solid business model with the potential for long-term success. They also verify that each company meets compliance requirements for Regulation CF (crowd funding) or Regulation A+ campaigns.

Applying to Work with StartEngine

StartEngine is a curated platform. This means that all startups have to go through an application process in order to launch a campaign. Each startup will need to choose whether they would like to pursue a Regulation CF campaign or a Regulation A+ campaign. Regulation CF campaigns allow companies to raise up to $5 million in funding, with a minimum investment goal of $10,000. Regulation A+ campaigns are designed for larger, more established businesses and can raise up to $75 million in funding.

After your company has gone through the application process and been approved, you will receive a dedicated account manager and a campaign strategist. Your account manager and campaign strategist will help you put together a detailed, appealing campaign page for the StartEngine website.

They will also manage the necessary SEC paperwork for your campaign. This will ensure that you remain compliant throughout your fundraising round. You will need to provide some basic legal documents in order to file with the SEC. You will also need to set a minimum investment price for your campaign. StartEngine allows you to set a minimum investment as low as $100, but you can opt to set it higher.

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StartEngine’s Investors

StartEngine has a wide user base that has consistently grown over the last several years. They accept both accredited and non-accredited investors from around the world. Startups can choose the minimum contribution level for each investor according to their own funding goals.

Some startups have minimum investments of just $100, which attracts investors that wouldn’t normally be able to invest in startups. You can also set your minimum investment higher if you want to target accredited investors and those with a higher net worth. StartEngine also has features like a secondary trading market for startups and collectible trading to attract a wide range of investors.

StartEngine’s Campaigns and Marketing

When you launch your StartEngine campaign, you will need to create a detailed pitch page. StartEngine will promote your pitch page on their website. The StartEngine team is available to help you develop your pitch. You can add videos, photos, and graphics to your pitch. You’ll also need to provide information about your business model, company financials, and your team. 

They also allow startups to offer perks for their investors. These can include early access to products, investors-only exclusives, or lifetime discounts. As your campaign progresses, you will have access to an analytics dashboard. This will give you a detailed look at your fundraising campaign.

StartEngine Fees

StartEngine does not charge entrepreneurs any fees up front. You will only pay StartEngine’s fees if the campaign is successful. For Regulation CF campaigns, StartEngine charges 7 to 12 percent of the total capital raised as well as 2 percent of what you raise in equity. They also charge $10k in deferred revenue. Fees for Regulation A+ campaigns are more complex and will depend on the specifics of your campaign.

Additionally, most startups will need to cover the cost of financial reviews and documentation for their campaigns. The cost of this typically varies anywhere from $4,000 to $10,000 for Regulation CF campaigns. It can be as high as $100,000 for Regulation A+ campaigns.

StartEngine as Compared with WeFunder and Republic

There are many different platforms to choose from as you build your equity crowdfunding campaign. Two options that are often compared to StartEngine are WeFunder and Republic. While these platforms have many similar fundraising options, there are differences among them. Ultimately, the best option for you will depend on what you are looking for in an equity crowdfunding campaign.

The biggest difference to note is that WeFunder is not curated, while StartEngine and Republic are. This means that WeFunder does not have the same strict selection process that StartEngine does. When compared to Republic, StartEngine focuses more on building a large investor base with a wide variety of investors. Meanwhile, Republic focuses more on accredited investors and building industry connections.

It is important to note that 2021 was a successful year for StartEngine, according to their CEO, Howard Marks. They have recently opened crowdfunding campaigns for alternative assets such as rare collectibles and works of art.

For more information on StartEngine and other platforms go to CrowdFunding.Guide (CFG). This is a place to explore and learn about various equity crowdfunding platforms from the US, UK, and elsewhere. The site also has a lot of information about other services for startups raising capital, including special offers and discounts for the site’s visitors.

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Final Thoughts

If you’re looking for an equity crowdfunding platform to launch your startup, StartEngine is an interesting choice. StartEngine has a large and established base of investors that are active on the platform. Because they are a curated platform, they are able to provide plenty of resources and support to each crowdfunding campaign they run.

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The post StartEngine Review: Should Startups Use It to Raise Capital? appeared first on Business Opportunities.

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