Venture capitalists (VCs) have prided themselves for several decades on financing the democratization of dozens of industries.
Robinhood Markets Inc. lets anyone become a stock market investor, and Shopify Inc. lets anyone have their own online store.
But it looks like venture capital itself is on the cusp of a major disruption. StartEngine is a leading crowdfunding platform that allows anyone to invest in startups — including StartEngine itself. That means anyone can invest in this high-growth startup alongside Kevin O’Learystablecoin parent company USD Coin, Circle and tens of thousands of retail investors.
Seed investing can be a goldmine when done right, as all it takes is usually one successful investment to build a portfolio. Venture capital consistently beats the overall stock market, with the average return from venture capital funds a staggering 25% per year.
But until recently, it was illegal for ordinary investors to invest in this asset class. StartEngine changes that by allowing anyone to invest in startups. This means that startups can turn customers into investors and investors into a group of thousands of brand ambassadors and supporters.
What’s potentially more important is that StartEngine raises funds itself, which means you can invest and share in the profits. The company is not yet publicly listed, but that means you can invest before it launches an initial public offering (IPO) and capture the growth you see on some of those big IPO days. .
StartEngine is particularly interesting because not only is it the leading equity crowdfunding platform, but it also takes a percentage of almost every company raised on the platform. This means that StartEngine itself is essentially like a startup fund, but also a high-growth startup in a rapidly growing emerging market. StartEngine recently leveraged its industry lead to acquire rival platform SeedInvest.
Another promising aspect of StartEngine’s business is the creation of StartEngine Secondary, one of the first and only active startup secondary marketplaces in the United States. StartEngine aims to provide secondary liquidity to the millions of dollars raised on the platform. Instead of a company’s only option for a return being an IPO or acquisition, Secondary allows investors to cash out while StartEngine takes a percentage of the volume.
The equity crowdfunding market has warmed up with nearly 100% growth for the past two consecutive years. As a market leader, StartEngine seeks to capture this growth. This is already having an impact on the venture capital world, as it creates an alternative funding method for startups. This means equity crowdfunding and venture capital are actively competing for deal flow, and in some cases, equity crowdfunding wins.
Learn more about investing in startups from Benzinga
Photo: Courtesy of StartEngine