StartEngine is one of the largest crowdfunding investment platforms, using Reg CF and Reg A (as well as Reg D for some side-by-side offerings) to bring startup investments to anyone, in some cases for as little as $ 100. There is a large selection to choose from, covering a wide range of industries, from fashion to healthcare to electric vehicles. However, investors should be aware that the deductible is very limited, so the quality of the investments can vary widely depending on the offers available.
Pros and cons of StartEngine
• Open to non-accredited investors
• One of the largest Reg CF investment platforms with a very wide range of investments available (over 60 to date)
• Low minimum investment amounts
• Very detailed investor presentations with an easy-to-find Q&A history
• Many investments also offer advantages at different investment levels
• Start-up investments are inherently risky and illiquid
• No curation or due diligence of offers (beyond minimal background checks and anti-fraud checks)
• Reviews entirely prepared by the fundraising company
• Confused network of connected units
• Accepts credit card investments, which seems irresponsible
This StartEngine review will help you learn more about StartEngine's investment offerings, including the structure of alternative investments at StartEngine and the potential returns. Here you can find out more about the criteria we use to evaluate investment platforms.
StartEngine is a Title III funding portal (also known as Reg CF) that is registered with the SEC and regulated by FINRA. While some investment crowdfunding sites take a strong curatorial approach to company selection, StartEngine is one of the platforms with a more open market philosophy, offering minimal due diligence to companies’ "bad guys" of rules.
Is StartEngine Legit?
Yes, StartEngine is "legitimate" in the sense that it is a legitimate and regulated company and is a legitimate investment option for anyone over the age of 18.
StartEngine is one of a growing line of online crowdfunding and alternative investment platforms, most of which were created under the JOBS Act of 2012.
In the second half of 2017, StartEngine began rapidly increasing the number of new offerings, and early 2018 overtook Wefunder with a total of new Reg CF offerings. The company had sales of more than $ 4.9 million in 2018, with more than $ 80 million invested in the platform by 180,000 registered users.
What do you get when you invest with StartEngine?
The specific types of securities will vary depending on the investment, but investors will typically receive common stock or a convertible bond. All of the offerings on StartEngine appear to be a direct investment and not through a special purpose vehicle like an LLC. Investors in ICOs can receive “token” units that are denominated in a cryptocurrency.
How does StartEngine make money?
There are no fees for investors. StartEngine charges companies that collect donations on their platform with 6-8% of the amount raised. However, issuers can offset these costs by charging investors a processing fee of 2.5% on top of the share price.
Potential returns and cash flow
Investments in StartEngine are high-risk investments in startups and growing companies. There is no payment of interest or dividends and, except in very limited circumstances, the investment must be held for a minimum of 12 months after which period there is minimal market expectation. Most start-up investments lose some or all of their value. Learn more about StartEngine here.