1. Stars at the Helm

The success of a campaign largely depends on who represents the company to investors. In this respect, StartEngine is unique. In addition to having Howard Marks, who has a significant business background as the CEO, being a co-founder of Activision and Acclaim Games before StartEngine, the company’s spokesperson and strategic advisor is none other than Kevin O’Leary. Kevin is a well-known media personality, investor, billionaire businessman who has appeared in several seasons of Shark Tank and Dragon’s Den, earning the nickname “Mr. Wonderful.” Given his prominence, it’s not surprising that StartEngine chose him as the face of the company and its own campaigns. A familiar face like Kevin’s adds considerable appeal to any campaign.

2. Diversified Revenue Streams and Bold Solutions

It’s also worth examining what types of revenue are behind StartEngine’s growth story. What makes the StartEngine story believable to investors from a business perspective? To illustrate, we use data from the company’s 2022 annual report.

Obviously, the majority of revenues are directly related to equity-based campaigns and come from the fees paid by the companies running the campaigns. These campaign success fees accounted for nearly 65% of total revenues, with 94% from StartEngine Premium, under which StartEngine experts design the campaign page, strategy, and marketing materials for campaign owners. An additional 53% came from post-campaign services. However, the vast majority of the remaining revenue, which accounted for 182% of total revenue, was raised from investors through the so-called OWNers Bonus subscription. This ratio is extraordinarily high among equity crowdfunding platforms.

The OWNers Bonus turns the aforementioned large number of visitors into revenue through an affordable annual subscription program. In exchange for the subscription, potential investors receive several services:

For every investment in campaigns participating in the Bonus program, they receive a 10% bonus in shares for their investments. Unsurprisingly, StartEngine campaigns are participants in the program.

On the website, investors can indicate interest in campaigns that have already reached their maximum funding goal, and if someone is an OWNers Bonus subscriber, they move to the front of the waiting list.

The subscriber can sell shares with a smaller transaction fee on StartEngine Secondary, a secondary market operated by StartEngine for companies that have conducted campaigns on the platform.

The subscriber also has the opportunity to sell shares on the StartEngine Marketplace, another secondary market operated by the company.

The difference between the two secondary markets is that on StartEngine Marketplace, shares of startups that did not conduct campaigns on StartEngine can also be traded. For investors with investments from other platforms, the OWNers Bonus can be a good opportunity. The secondary markets provide liquidity to many startups, offer exit opportunities to investors, and with the growth of the Marketplace, make the subscription more attractive and generate some revenue from transactions, often involving startups that conducted campaigns on other platforms. The success of the Marketplace generates even more visitors to the site.

In addition to the OWNers Bonus program, StartEngine employs other innovative solutions. For instance, they sometimes take a portion of the campaign success fees in the form of the campaign company’s shares, creating a diversified startup portfolio for themselves from which they can realize high profits within 5-10 years, just like other investors. At the end of 2022, such shares accounted for 25% of StartEngine’s total balance sheet.

The company also offers investment opportunities in securitized valuables, such as paintings, watches, and comic books, on an experimental basis, in addition to startup investments.

Finally, but not least, StartEngine incentivizes its platform investors to increase the company’s traffic with two referral programs. One program rewards users with StartEngine shares for inviting others to register on the site. The other program provides a significant one-time payout to users who refer a startup that launches a campaign on the site.

As we can see, everything revolves around reaching the largest possible user base, which is the flagship of StartEngine’s growth.

 

+1: Local and Positional Advantage

Besides the points mentioned, it cannot be overlooked that StartEngine is one of the first American equity crowdfunding platforms. This relatively long market presence assures investors of the company’s sustainability and positions the company as a trendsetter in the market. For successful campaigns, it also matters—and this is true for all American equity crowdfunding campaigns—that equity raising takes place in an environment where individual stock ownership has a strong tradition among the population, unlike in continental Europe, for example.