Since its founding in 2016, StartEngine has raised over $125 million for over 325 companies. CEO Howard Marks co-founded what is now Activision Blizzard (NASDAQ:ATVI), but most people couldn’t pick him out of a line-up. Look for him on Wikipedia and you’ll find a different Howard Marks, a billionaire whose Oaktree Capital Management specializes in distressed securities.   To gain star power, StartEngine recruited “Mr. Wonderful,” investor and Shark Tank talent Kevin O’Leary, as a strategic advisor and investor. StartEngine calls itself the largest equity crowdfunding program.   But don’t let that stop you from taking this incubator and crowdfunding enterprise seriously.  

StartEngine Review: What’s Under the Hood

  StartEngine is a full-featured crowdfunding enterprise that takes advantage of every opportunity.   Launched to do equity crowdfunding under the JOBS Act, StartEngine was approved as a broker-dealer in 2019 and accepts bitcoin as well as dollars from investors.   StartEngine crowdfunds itself. It closed its first Reg A+ round for $8.6 million, at $7.50 per share, then began a second round of $41 million at a price of $11.25, and it has filed for a regular CF offering at truCrowd, listing its valuation at $190 million.   Marks says he got interested in initial coin offerings in 2017 and launched its first ICO, for tZero, founded by Overstock.com (NASDAQ:OSTK) founder Patrick Byrne, in 2018.   StartEngine launched its first investor meeting, called the StartEngine Founders Summit, in 2018. The most recent one was virtual, a March webinar.  

The O’Leary Connection

  Marks said several of his companies had already been on Shark Tank before he approached O’Leary. In addition to acting as a strategic advisor and face of the franchise — with advice for entrepreneurs and StartEngine publicized through his fame — O’Leary is also a shareholder.   It’s Marks who runs the show. His aim is to provide a new base for companies, helping them sell equity from startup through public offering. He has an interest in every type of crowdfunding vehicle and wants crowdfunding to be as legitimate as Goldman Sachs (NYSE:GS).  

Some StartEngine Successes

  StartEngine calls its crowdfunding efforts online public offerings.   One of past successes is BioClonetics, working on a cure for HIV using monoclonal antibodies. It raised $256,000 on a valuation of $15 million.   Farm.One uses vertical farming, hydroponics and LED lighting to grow rare produce in New York’s Tribeca neighborhood. It raised $446,000 on a valuation of $7 million.   A third funding winner, Mycroft AI, offers a voice interface that isn’t controlled by a large platform such as Amazon (NASDAQ:AMZN). It raised $1.07 million at a valuation of $19.9 million.  

Current Offerings

  Here are some of the 76 current offerings:   TerraCycle says it can recycle the “unrecyclable,” turning things like toothbrushes and laundry bottles into plastic feedstock. The company made $1.1 million on revenue of $20 million in 2018 and pays a dividend.   IX Water converts industrial containment water, the kind you find around oil wells, into usable water. Drillers produced 150 billion barrels of this water last year, which IX calls a $75 billion opportunity. So far, it has raised $133,000 at a valuation of $13.1 million.   Knightscope offers crime-fighting robots in the form of machine-as-a-service tech. They range from stationary and indoor models to one that can roll across a variety of outdoor terrains. So far, it has raised $7.1 million at StartEngine, out of a total investment of $40 million.  

The Bottom Line on StartEngine

  While most StartEngine offerings are for equity, the company does host other types of offers, including those for a revenue share, convertible stock and debt. Investor money is held in escrow until closing, then disbursed to the offering company. The equity is in the form of a subscription agreement.   StartEngine is, like the companies whose offerings it sponsors, a startup seeking both a leadership position within its niche and legitimacy for that niche. It has already taken large strides toward that aim.   Dana Blankenhorn has been a financial and technology journalist since 1978. His latest book is Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, essays on technology available at the Amazon Kindle store. Follow him on Twitter at @danablankenhorn. As of this writing he owned shares in AMZN.