StartEngine Accounts Are Here – What That Means for You as an Investor
Equity crowdfunding is growing fast. Just take a look at StartEngine – we’ve had over 500% revenue growth in the last three years. As equity crowdfunding matures and the industry approaches 30M investors, it’s becoming more important to offer the same conveniences you’d find on major trading platforms for public securities like RobinHood or eTrade. And StartEngine has just unlocked a key capability that we believe allows us to offer services similar to those platforms.
Introducing StartEngine Accounts.
As an investor, you can now create a brokerage account directly on StartEngine. This means you can deposit funds and use them to invest in the many offerings on our site. Similarly, if you sell shares on our peer-to-peer marketplace, StartEngine Secondary, all that money goes straight to your brokerage account; down the road, we plan to do the same for companies in your portfolio that pay dividends or get sold for cash. No need to go through a clunky third-party process. Pretty convenient.
StartEngine brokerage accounts are also entitled to SIPC protection. This protection allows account holders to regain value from their assets – up to $500k per customer, including up to $250k for cash – in the unlikely event that StartEngine Primary LLC becomes insolvent. Of course, it doesn’t protect against market risk (i.e. the risk inherent in a fluctuating market). Nonetheless, this is the kind of protection expected by most investors in public securities. It should be available with equity crowdfunding platforms too.
We believe this puts us years ahead of the competition.
Do other equity crowdfunding platforms offer brokerage accounts? No they do not. They may use the term “account” to refer to a user who’s registered on their platform. But what they actually do is transfer cash from the investor’s bank account or credit card directly to the escrow for each offering. Since there’s no central account – or any account for that matter – this process needs to be repeated for every single transaction. Completely different and years away from offering what we have now.
Accounts are good news for companies too.
Who else benefits from StartEngine Accounts? Companies raising capital on our platform. As a rule, businesses don’t want to manage thousands of investors on their cap table, particularly when it comes time to raise follow-on rounds of capital. Well, with the introduction of brokerage accounts, StartEngine becomes the nominee for all those investors who bought shares during the equity crowdfunding raise. That means only one entry on the cap table, even if a startup has thousands of new investors..
Being the first to innovate in a growing marketplace feels like a familiar spot for StartEngine. And with the creation of StartEngine Accounts, we’re proud to be there again.