StartEngine Starts Secondary Marketplace – Equity Crowdfunding is Growing Up
StartEngine, one of the prominent securities crowdfunding platforms in the United States, has exciting news to share as it officially launches its highly anticipated secondary marketplace. You read that right; equity crowdfunding has a living, breathing secondary market
Having obtained approval to operate as an Alternative Trading System (ATS) for some time now, StartEngine’s previously announced platform has finally become a reality after months of anticipation. In an email announcement, StartEngine revealed that as of July 14, 2023, buyers and sellers can now post their interest on a bulletin board known as the StartEngine Marketplace. This bulletin board facilitates trading of shares issued via their platform, as well as shares from other investment crowdfunding platforms.
StartEngine primarily focuses on helping issuers raise capital under two regulations: Reg CF (Regulation Crowdfunding) and Reg A+ (Regulation A). Under Reg A+, issuers have the option to make their shares available for trading immediately. However, for other exemptions like Reg CF, there is a waiting period before shares can be sold. While StartEngine didn’t explicitly mention whether shares issued under Reg D would be available for trading, it’s likely that they might be included as well.
StartEngine Secondary Is a Nasdaq for Crowdfunding. –
With the launch of their secondary marketplace, StartEngine Marketplace boasts a significant collection of over 6000 securities available for trading. Sellers who wish to use the platform will be subject to a 5% fee, while buyers will incur a 3.5% fee for their transactions. Making 8.5% from both sides of the transaction should help StartEngine finally reach the promised land of profitability
Despite the wide selection of securities available, StartEngine cautions users that certain restrictions might be in place, which could affect the ability to buy or sell these securities promptly. While a security may be displayed on the bulletin board, it’s important to note that there is no guarantee that an active trading market will develop for those particular securities.
To manage the trading process effectively, StartEngine notifies users that transactions on the platform may take 30 days or more to complete. If a trade remains unresolved after 90 days, it will be canceled.
StartEngine’s introduction of the secondary marketplace addresses a significant challenge in the private securities market – liquidity. Traditionally, investing in private securities required patience, as an exit opportunity typically relied on a public offering or a merger and acquisition event. However, with the launch of this secondary platform, investors now have the option to sell their securities before such events occur. Although it may take time for trading activity to gain momentum, the growing popularity of private securities should eventually boost secondary transactions.
It is worth mentioning that StartEngine Marketplace operates under StartEngine Primary, a FINRA-regulated broker-dealer registered with the SEC, providing investors with an added layer of confidence and security.
In conclusion, the launch of StartEngine’s secondary marketplace is a significant milestone for the private securities market. By offering a platform for trading shares and enhancing liquidity options for investors, StartEngine is contributing to the growth and accessibility of the private securities sector. As the marketplace evolves and more investors participate, the prospect of increased secondary transactions for securities under Reg A+ and Reg CF becomes more promising.