What StartEngine’s Broker-Dealer Means for Investors
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 LLC 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.
What does StartEngine’s broker-dealer mean for investors?
To date, the majority of offerings on StartEngine have been Regulation Crowdfunding offerings, so for many of our offerings, nothing changes. However, over time you may notice a few changes with Regulation A+ offerings (those raising up to $50M).
Those changes include:
- More customers raising capital through Regulation A+ on StartEngine
- Investors from all 50 states will be able to invest in Regulation A+ offerings
- More Regulation A+ offerings will allow credit card investments
With StartEngine Primary LLC, we plan to conduct larger raises under Regulation A+, and more of them, bringing you a greater variety of investment opportunities.
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 broker-dealer approval as part of StartEngine’s long-term plan to build a marketplace for private securities, where investors can buy and sell securities they [originally] purchased 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?
Our broker-dealer is the next step of becoming a platform that provides a full suite of services to both companies and to 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 choose to raise capital with.
What does this broker-dealer mean for StartEngine?
We can provide companies raising capital under Regulation A+ a full range of services, as we have provided to the companies raising capital under Regulation Crowdfunding through StartEngine Capital LLC, StartEngine’s funding portal. We are able to offer companies the ability to raise up to $50M directly from the general public and we will also be able to syndicate Regulation A+ offerings with a network of broker-dealers.
Our crowdfunding platform has been built over the last 4 years into one of the most successful platforms in the marketplace. We can offer investors the ability to use credit cards or bank transfers and wires to invest in companies on StartEngine.
StartEngine Primary is also the next step on our path towards building an investor trading platform, which is on our roadmap for the future. This trading platform, to be called StartEngine Secondary, will create liquidity for investors and allow them to buy and sell shares purchased in companies that have previously raised capital on StartEngine. This secondary market will give investors the possibility of earning a return before the company they invested in gets acquired or goes public, though of course investments carry risk and there is no guarantee of future returns.
We’re excited for this next step, and we hope you are too.