StartEngine Capital had a good week.
The equity crowdfunding portal has been registered with the Securities and Exchange Commission (SEC) and was also approved for Financial Industry Regulatory Authority (FINRA) membership.
The achievements position StartEngine to serve as a funding portal for regulation crowdfunding and begin posting security offerings when that option becomes effective May 16.
Regulation crowdfunding was created from Title III of the JOBS Act and allows companies to raise up to $1 million within a 12-month period. Those offerings must be conducted by a funding portal such as StartEngine, or an SEC-registered broker-dealer that is also a FINRA member.
“The SEC was mandated to regulate crowdfunding, and it did so in a way that allows us to serve up-and-coming business owners and help them meet their capital needs,” said StartEngine CEO and Co-founder Ron Miller. “There are thousands if not millions of investors interested in investing in companies getting off the ground.
“Regulation Crowdfunding enables our funding portal to help these companies connect with investors to grow their businesses.”
Under Regulation crowdfunding issuers need to file a disclosure and information statement statement on Form C with the SEC that includes financial statements and risk factors. That information must be displayed on the portal for at least 21 days. Issuers must meet annual reporting requirements.
StartEngine issuers can sell common stock, preferred stock, and debt securities to site-registered investors who are at least 18 years old. Those investors have limits based on income or net worth.
Issuers can create a campaign page including the Form C filed with the SEC, videos and other communication.
“Historically, small and emerging companies did not have access to traditional capital-raising methods such as bank debt, angel financing, or venture capital funding,” StartEngine executive chairman and cofounder Howard Marks said. “We believe that every startup should have the opportunity to grow.”
“StartEngine provides an alternative way to finance,” Mr. Marks continued. “When regulation crowdfunding is effective on May 16, 2016, access to capital through equity crowdfunding could be groundbreaking and will allow for faster innovation and growth for privately-owned businesses of all sizes, especially smaller and early stage companies.”