StartEngine Launches StartEngine Marketplace To Give Liquidity To Startup Investors

StartEngine, a popular startup investing platform, announced the launch of StartEngine Marketplace, a service that allows anyone to buy and sell shares in startups and other private companies freely. 

Unlike the larger stock market, when you invest in startups, it often takes years before you see a return. The burgeoning equity crowdfunding industry has been the subject of controversy for its lack of liquidity. Many investors aren't able to afford to have shares in early-stage companies locked up for years. But comprehensive Securities and Exchange Commission (SEC) regulations and state laws make it difficult for investors to sell their shares prior to an initial public offering (IPO).

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The new marketplace helps solve this issue by giving investors liquidity in seemingly any startup that has raised through Regulation A (Reg A) or Regulation CF (Reg CF). In total, the marketplace lists hundreds of startups that have raised under the exemptions. 

But the marketplace has limitations. SEC regulations state that investors in Reg CF companies cannot sell for at least 12 months, which still applies. But selling stock in Reg A offerings is available once a raise concludes. Along those same lines, investors cannot sell while a Reg A or Reg CF raise is active. 

Subject to the limitations above, anyone can purchase shares. But to sell shares, StartEngine requires an Owners Bonus subscription.

Dozens of investors are listing their shares in a host of different startups on the StartEngine Marketplace.

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StartEngine previously launched a similar marketplace under a different model — StartEngine Secondary, which operated more like the modern-day stock market. The market was open for a couple of hours per day, five days per week. During market hours, investors could put in limit orders, which would be matched to complete transactions. But the market only listed a handful of issuers that agreed to be on the market, which limited its traction. 

StartEngine’s CEO, Howard Marks, has clarified Marketplace is different from StartEngine Secondary and they do not plan to scrap StartEngine Secondary. StartEngine will reportedly list on StartEngine Secondary after StartEngine closes its ongoing raise later this year.

The new model's immediate traction will hopefully add more liquidity to the ecosystem, allowing investors access to potential gains associated with their investments.

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