Should you use StartEngine to invest in startups like a VC or find funding for your startup? In this StartEngine review we'll dive deep into the popular equity crowdfunding platform, StartEngine.
StartEngine Review Summary
StartEngine is an equity crowdfunding platform that’s beneficial to both startup companies and investors. In our review, we found that for startups looking to raise, StartEngine makes fundraising as streamlined as possible for early-stage companies while charging reasonable fees. For investors, StartEngine puts numerous vetted startups in front of you to invest in while charging low fees and low investment minimums.
We’ve been cooking up our StartEngine review for a while now and ours is going to be pretty unique.
This review is going to take a look at StartEngine and see if the equity crowdfunding platform is a good fit for you if you’re an investor who wants to increase their net worth or if you’re a startup founder looking to raise funds for your company.
Key findings from our review:
- Unique angel investment opportunities for regular, smaller investors.
- Streamlined crowdfunding opportunities for growing startup companies.
- A lot of backend assistance for both startups and investors.
- Safe for both investors and startups who want to raise.
Pros & Cons Of StartEngine
What Is StartEngine? Company Info and History
StartEngine is an equity crowdfunding platform that lets founders raise capital for their startup and pretty much any investor invest in startup companies.
You don’t need to be an accredited angel investor to take advantage of startup investment opportunities anymore because of crowdfunding platforms like StartEngine.
As we said in the beginning of this article, this StartEngine review will take a look at how good Start Engine is from both the founders and the investors side of things. StartEngine is a platform that’s supposed to be beneficial for both early stage startups and investors at the same time.
StartEngine was founded by Howard Marks and Rob Miller back in 2014. The company is currently headquartered in the United States, specifically West Hollywood, California.
How Does StartEngine Work?
StartEngine works for both investors and startups. It's essentially a two sided marketplace: On one side, founders launch crowdfunding campaigns to raise money from investors, and on the other side, private investors can purchase equity in those companies.
You can invest a little amount of money in these early-stage startups and become their shareholder. And same goes for founders, you can pitch your startup idea here, and you will be listed on their site and people can actually invest in your startup.
What is an Equity Crowdfunding Platform?
An equity crowdfunding platform is a crowdfunding platform that is specifically geared towards raising money for early stage startups via crowdfunding mechanics (think Kickstarter but specifically for startups).
Equity crowdfunding is different from regular crowdfunding.
Equity crowdfunding is a way for startup companies to bypass traditional methods of raising cash (like working with venture capital funds) and raise capital for their company using the crowdsourcing power of a platform like StartEngine. Investors can help finance startup companies on these crowdfunding platforms and get company securities and a stake in these startups in exchange for their investment.
StartEngine For Founders: A Crowdfunding Space That Provides Companies With An Account Manager?
StartEngine lets founders raise capital for their startup companies by getting investments from investors in exchange for a company stakes. StartEngine provides an easier and more convenient way for startup companies to find investors.
StartEngine charges fairly reasonable fees for startups. Startups need to pay 7% of the total capital that they raise and another 2% of what they raise in equity.
StartEngine offers founders and startup companies two crowdfunding options:
- Seed Round: The seed round is best for smaller businesses that have an ARR of below $3 million. If you choose to go with the seed round, you don’t need to put any upfront money and you can raise up to $5 million for your startup.
- Series A (To C): This one is best for bigger companies and lets you raise up to $75 million for your startup. Series A (To C) has additional fees on top of what’s normally charged because of this but you gain access to a registered broker/dealer as well as more StartEngine-provided marketing tools with this option.
If you and your startup choose to work with StartEngine, they’ll give you onboarding assistance as well as provide financial advice. For example, when you start working with them, you’ll get an account manager that’ll help you with your startup offering before the StartEngine compliance team gives it the go-ahead.
StartEngine also provides you a campaign strategist that’ll help you manage your campaign as well as assist with any paperwork or SEC filings that need to be handled.
How Do You Apply For Funding On StartEngine
If you want to apply for funding on StartEngine, your startup needs to meet the basic criteria set by StartEngine. For instance, you need to be a company that operates in the US and the founder of the startup needs to be at least 18 years old. You also need to make sure your startup isn’t a prohibited type of company by StartEngine’s standards.
Step 1 is to create an account with StartEngine as a founder.
Before you launch your crowdfunding campaign on StartEngine, you’ll need to provide them with:
1. Your Startups Story
Give a story of what your startup is, what it does and how it hopes to achieve success. This is what potential investors are going to see on your campaign page and what’s going to convince them to invest their money in your startup.
2. Your Terms
You need to submit your startups valuation, type of security offered and amount of said securities offered. All of this is decided by you and your startup.
3. Legal Requirements
You need to submit your startup's corporate documents to StartEngine such as your Articles Of Incorporation and Board Resolutions. These documents are required to get approval for your crowdfunding.
4. Financial Requirements
- If you want to raise up to $107,000 then you can self certify your financials.
- If you want to raise up to $1.07 million, you can use StartEngine’s recommended CPA vendors to get a 2-year independent financial review done.
- If you want to raise up to $5 million, you’ll need a full financial audit done.
StartEngine For Investors: You Don't Need To Be A Financial Professional To Be An Angel Investor!
StartEngine allows any investor to invest in startup companies, not just accredited investors. You don't need to be a business insider, banking partner or friend of a CEO to be an angel investor anymore!
The first phase of signing for a StartEngine account is simple. All you have to do is provide a username, your name as it shows up on your identification card, and create a password. To continue and open a StartEngine investment account, you must provide the following details:
Starting a StartEngine account is simple. First, create an account here. You’ll then need to provide StartEngine with:
- A username
- Your full name as shown in your ID
- A password to your account
- Your current address
- Your cellphone number
- Your current employment status
- Your marital status
- Your number of dependents
- Your date of birth
- Your country of citizenship
- Your Social Security number (SSN) and/or your taxpayer identification number (ITIN)
- Your investment objective
- Your investment experience
- Your annual income
- Your liquid net worth
- Your total net worth
- How you plan to invest with StartEngine
Products & Investment Options
Startup companies can raise funding for their companies using equity crowdfunding. StartEngine offers startup companies two options:
- “Seed Round” where you can raise up to $5 million for your company.
- “Series A (To C)” where you can raise up to $75 million for your company.
Startup companies can also get backend help from StartEngine. For example, StartEngine offers you:
- Onboarding assistance
- Account manager services
- Campaign strategist services
- CPA services
- Strategic advisor services
Investors can browse all the available startup companies on StartEngine and sort them by industry or by how much funding the startup has already raised. As of this writing, there are currently 157 startups available for investors to invest in on StartEngine.
Here’s a few of them for you to browse:
- $18.3M Raised
- 8006 Investors
- $1000 Min. Investment
Jet Token Inc.
- $4.31M Raised
- 5033 Investors
- $349.50 Minimum Investment
- $5.59M Raised
- 3295 Investors
- $500 Min. Investment
- $2.07M Raised
- 526 Investors
- $600 Min. Investment
Famous Startup Companies That Raised On StartEngine
Here’s a quick list of 5 startups that used StartEngine to raise capital for themselves and grow their businesses.
Jetson is a voice powered marketplace where brands sell their product and services to customers who want to use their voice to look for the things they need. Jetson raised about $135,000 from 179 investors during their equity crowdfunding round and currently are valued at $20 million.
Booksniffer is a book selling platform that offers an alternative for authors who just can’t seem to get going on Amazon or Google Play. They provide better book landing pages for authors as well as more user-friendly as well as budget-friendly ad options for authors. Booksniffer raised about $90,000 from 148 investors during their equity crowdfunding campaign and the company has a valuation of $18.4 million.
SkillSoniq is an AI-powered recruiting service provider that uses AI to help contractors and employers find the best fits possible. SkillSoniq raised $65,000 from 148 investors during their equity crowdfunding campaign and they currently are valued at $10.3 million.
Care Angel made an AI powered, voice-enabled assistant to provide personal care and healthcare monitoring to sick people that would rather stay at home than in a hospital. Care Angel raised $232,000 from 247 investors during their equity crowdfunding round and the company has a $45.7 million valuation.
Learnt is a tutoring service that aims to match students with vetted tutors as efficiently as possible. They use artificial intelligence to make this possible. During their equity crowdfunding campaign, Learnt raised $130,000 from 181 investors and the company currently has a valuation of $9 million.
If you're a founder looking to raise capital on StartEngine, use this link to sign up and apply.
Who Should Use StartEngine?
Founders and startups that want to raise money while going through a streamlined crowdfunding process should give StartEngine a try.
If you're a founder who wants to get money raised and doesn't mind giving other platforms a shot and, then go for it!
Investors who are looking for alternative investments and want to invest in promising startup companies should also use StartEngine.
You need to understand the risks of investing in these kinds of investment choices but not be afraid to take risks and be hard working enough to do their due diligence.
Can You Make Money on StartEngine?
Generally speaking, yes. Both startups and investors can make money on StartEngine.
Founders can make money by raising capital for their new startup companies. By letting investors in at the ground floor, founders can get a large amount of funding from prospective investors.
Investors can make money by investing in different companies that experience impressive growth. They can also make money using the alternative trading system, StartEngine Secondary.
StartEngine Secondary is StartEngine's' investor trading platform. It's a trading system that matches orders for buyers and sellers of private securities. It lets investors trade the shares they get from StartEngine.
StartEngine Costs & Fees
StartEngine makes money from both startups as well as investors by charging both of them various costs and fees. As a whole, the platform boasts a minimum "StartEngine cost" for founders, startup companies and accredited as well as non-accredited investors.
StartEngine Fees For Founders And Startups
StartEngine charges a reasonable amount of fees for founders and startup companies. They charge a 7% fee off the total capital raised for Regulation Crowdfunding offerings, a 2% fee off what’s raised in equity and they charge $10,000 in deferred revenue that’s collected once the crowdfunding campaign is over.
There are separate costs and fees if you launch a Regulation Crowdfunding (Reg CF) campaign. These require a financial review and legal documentation that cost anywhere from $1,000 to $10,000.
Meanwhile, Regulation A+ is more expensive. It can cost you upwards of $50,000 to $100,000.
Founders should apply and sign up at this link.
StartEngine Fees For Investors
StartEngine charges low investment fees. The platform has a 3.5% investment fee and their minimum investment amount varies but is usually $100 to $1000.
Several companies have a minimum of $100 so you can diversify your investment portfolio pretty cheaply.
How Does StartEngine Compare To Other Equity Crowdfunding Platforms?
Let’s compare StartEngine fees with two of its more popular competitors. For your easy reference, StartEngine has a 3.5% investment fee and their minimum investment amount varies from company to company. The minimum is usually $100 to $1000 though.
Wefunder has a 2% transaction fee and investment minimums are at $100. However, the transaction fee goes up to 3.5% if you use a credit card.
SeedInvest has a 2% transaction fee and they have a $500 minimum on starting investments. SeedInvest is unique as it offers an auto-invest option that makes the investment process much simpler and convenient for you.
PS: Kevin O'Leary is the face of Start Engine! Depending on who you are, that's a great selling point.
StartEngine Reviews From Around The Web
StartEngine has mixed customer response online but almost all the negative reviews come from people complaining about how high risk angel investing is. Investing in startups is always going to be high risk and that’s not a problem that’s StartEngine’s fault.
Here's a few StartEngine reviews sites to explore:
- StartEngine receives 3.4 stars on TrustPilot.com. They get a lot of bad reviews from founders and bad reviews related to customer service on TrustPilot.
- They receive 4.4 stars on Facebook reviews.
- They receive 1.05/5 stars on the Better Business Bureau (BBB) out of about 20 reviews.
You must do your own due diligence and be aware of the risks involved with investing in alternative investment options such as business startups. If you're looking for safe investments that give out predictable dividend payments, then look elsewhere.
Yes, StartEngine is legit. Prospective investors can rest easy when they choose StartEngine and focus all their energy on making extra money.
You should use StartEngine because it’s a convenient, streamlined way to get up to $5 million or $75 million in funding for your growing startup. StartEngine also provides a bunch of backend services to help your crowdfunding campaign go as well as it possibly can.
As long as you are aware of the inherent risks that come with angel investing and investing in startup companies in general, you should use the StartEngine platform. The StartEngine Team do their best to filter out flat out frauds and scams through their company vetting process.
As long as you do the necessary amount of preparation, getting funding through equity crowdfunding on Start Engine is easier than it is on many other platforms. The streamlined processes on Start Engine as well as the backend assistance helps a lot.
StartEngine is a great platform for small investors because now anyone can become an angel investor and invest in startups with huge growth potential. The risk is definitely there but so is the reward.
The minimum investment you can make on a startup on StartEngine depends on the startup company. It’s usually $100 to $1000.
StartEngine Secondary is an alternative trading system that's run by StartEngine. The system matches orders for buyers and sellers of securities which lets users trade the shares they get on StartEngine.
Final Thoughts - Is StartEngine The Best Equity Crowdfunding Platform?
On the investor side, while there’s always risk involved with investing in startup companies, the StartEngine team does its best to vet the companies on the platform and weed out the frauds.
On the startup side, StartEngine support team provides detailed guidance on the fundraising process as well as help with startup marketing campaigns. Founders should sign up to raise capital here.
StartEngine is a leading equity crowdfunding platform because it focuses on providing a terrific user experience to both investors and startups. While other equity crowdfunding platforms have their advantages, StartEngine is a great all-around choice for anyone who wants to invest in startups and for any startup that wants to raise capital.