What StartEngine’s Broker-Dealer Means for Companies
We are very happy to share a big announcement about StartEngine and its new broker-dealer affiliate. After 18 months of tireless work, we have finally received broker-dealer approval. Our broker-dealer, StartEngine Primary, is a wholly-owned subsidiary of StartEngine Crowdfunding Inc. StartEngine Primary is registered with the SEC and is a member of FINRA.
StartEngine Primary will help facilitate future offerings that are being conducted under Regulation A+. Regulation Crowdfunding offerings (those that are looking to raise up to $1.07M) will continue to be conducted through StartEngine Capital LLC, StartEngine’s funding portal, as is required by Regulation Crowdfunding.
This means that companies raising capital under Regulation Crowdfunding are unaffected by StartEngine’s broker-dealer.
What does StartEngine Primary mean for companies on StartEngine?
All Regulation Crowdfunding offerings (those raising up to $1.07M) will continue to be conducted through StartEngine Capital LLC, our funding portal, which is also regulated by FINRA. If you are a business interested in raising $1.07M or less on StartEngine, our broker-dealer does not affect your raise.
However, if you are interested in raising more capital than that via Regulation A+, your raise will now be conducted through StartEngine Primary. There are a few changes that come with this:
- We have stricter eligibility requirements as a result of the offering being conducted through our broker-dealer, so there will be a more in-depth application process.
- We can now partner with other broker-dealers to increase deal flow to your offering.
- A new fee structure, in which StartEngine takes a percentage of the capital you raise, similar to our raise structure with Regulation Crowdfunding offerings. We don’t succeed unless you succeed.
- Investors will be able to participate from all 50 states.
- The majority of investments on StartEngine are made via credit card, and with our broker-dealer, you can more easily accept credit card investments in Regulation A+ offerings.
What is a broker-dealer?
A broker-dealer is an entity that is in the business of transacting in securities on behalf of customers. Broker-dealers are at the heart of trading securities and facilitate much of the trading in public stock markets.
We received a broker-dealer license as part of StartEngine’s long-term plan to build a marketplace for private securities, where investors can buy and sell the securities they purchase on StartEngine.
Broker-dealers are also extensively regulated. In this case, we registered StartEngine Primary, a wholly-owned subsidiary of StartEngine Crowdfunding Inc., with the SEC and became a member of FINRA.
Why is StartEngine’s broker-dealer so important?
We believe that this broker-dealer is the next step of becoming a platform that provides a full suite of services to both companies and investors. At StartEngine, we view Regulation A+ as the gold standard for companies. Companies can raise up to $50M every year through Regulation A+, accept investors from all 50 states, and the shares sold via this exemption are immediately tradeable.
With StartEngine Primary, our platform will be better able to facilitate companies raising capital with Regulation A+ and further enable our belief that companies should always be able to raise capital and have a say in the terms they raise capital with.
We encourage companies to begin raising capital with Regulation Crowdfunding and go on to raise larger rounds in the future on StartEngine under Regulation A+. With StartEngine Primary, we will be able to offer our customers all the brokerage services they need to raise capital under Regulation A+.
With our broker-dealer license, StartEngine can better serve as an alternative means of financing. Companies no longer have to look to venture capitalists and private equity firms for funding and can choose their own terms for their next funding round and take their next raise directly to their community.
We are excited for this next step at StartEngine, and we hope this perks your interest in raising capital on our platform. If you want to learn more about the process, please click here to schedule a call with our team.