E*Trade for Startups?

By Matthew Milner, on Wednesday, May 2, 2018

Here’s a riddle for you:

What do robots, craft beer, and med-tech devices have in common?

Ready for the answer?

They’re all made by start-up companies you can invest in right now.

But I’m not here today to tell you about beer or robot start-ups…

Instead, I’m here to tell you about the company that gives you access to these start-ups…

This company is aiming to become the E*Trade of the start-up world…

And for the next few weeks, you have the opportunity to invest in it…

55% Annual Returns

There are many good reasons to invest in start-ups — from the excitement of being involved with an innovative company at the ground floor, to the boost it gives the economy.

But perhaps the best reason of all is the profit potential.

According to Cambridge Analytics — a financial advisor to institutions like The Rockefeller Foundation, Harvard University, and the Bill and Melinda Gates Family Office — investing in start-ups has returned 55% per year over 20 years.

That trounces the returns from the stock market, which returned just 8% per year during the same period.

Here’s how to put the difference between 8% and 55% into perspective:

At 8% per year, in ten years, a $5,000 investment would turn into $10,000.

But at 55% per year, that same $5,000 would turn into $400,000.

That leads to our next riddle:

How do investors like you get access to these start-up investments?

Funding Platforms: Part of a $500 Million Ecosystem

You can’t find start-up investments on brokerage platforms like E*Trade or Schwab, and you can’t get access to them from your stockbroker.

Instead, you find them on a new type of website called a Funding Platform.

These platforms connect investors like you to start-up investments — and they’ve quickly become part of an ecosystem that’s delivered nearly $500 million to start-ups in just the last couple of years.

One of the most popular platforms is called StartEngine…

The Starting Point for Start-ups

StartEngine was founded in 2014 by two long-time entrepreneurs:

Ron Miller, an “Inc 500” award recipient who’s built and sold five start-ups…

And Howard Marks, the former founder of Acclaim Games (acquired by Disney), and former Chairman of video game leader Activision.

In exchange for connecting investors like you to start-up deals, StartEngine makes money in a few different ways, including:

Commissions — It takes 6% of the funds it helps raise.

Consulting Services — Companies pay StartEngine to create their funding campaigns.

Monthly Fees — It charges bigger companies a monthly fee of $20k to host their deals.

In addition, it can earn an ownership stake in these start-ups, so if these companies become successful in the future, StartEngine can capture some of the upside.

Based on these revenue streams, StartEngine earned nearly $1 million in the first quarter of 2018. That’s not bad for a young company…

But some recent initiatives indicate that StartEngine is just getting started…

StartEngine’s Future

StartEngine is positioning itself to become the “go-to” platform for all things related to early-stage funding.

For example:

It created an “index” to track the universe of early-stage funding. Just as the S&P 500 tracks the stock market, this index tracks early-stage activity…

It also created a “Secondary Market,” which enables investors to buy and sell start-up shares before the start-up is acquired or goes public. This means you could potentially turn your private shares into cash when you want to…

And more recently, StartEngine became the first U.S. funding platform to offer SEC-registered “Initial Coin Offerings,” or ICOs.

ICOs are a way for crypto-currency start-ups to raise funding, and they’ve quickly become a force in the funding world. According to The Wall Street Journal, crypto start-ups raised more than $6 billion through ICOs in 2017, and $1 billion in January 2018 alone. Numbers like that are on par with funding from more traditional sources like venture capital, so this is a big deal.

If StartEngine can succeed with these new initiatives, it’s got a shot at becoming the E*Trade of the start-up world…

But to get there, it needs more capital to grow — which is where you come in…

An Investment in StartEngine

StartEngine is currently raising $5 million.

And given its mission, it’s raising that capital from investors like you, with a minimum investment of $500.

Investors have already committed about $4.5 million of the $5 million, so clearly there is significant demand.

There’s just one big thing potential investors need to keep in mind:

The valuation for this round is $65 million. For a company doing about $1 million per quarter in revenues, that’s high.

To make 10x your money — that’s our target return for any early-stage investment; that’s how investors can earn 55% per year, even when some of their investments are “losers” — StartEngine would need to be acquired or go public for at least $650 million.

But if StartEngine can achieve its goal of becoming “E*Trade for Start-ups,” that’s not out of the question…

After all, E*Trade is currently worth $16 billion.

To learn more about StartEngine’s business and funding round, click here »

Happy Investing

Please note: Crowdability has no relationship with StartEngine, or with any of the companies or platforms we write about. Crowdability is an independent provider of education, information and research on start-ups and alternative investments.

Best Regards,
Matthew Milner

Founder
Crowdability.com

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