Equity funding portal StartEngine Capital LLC has been registered with the Securities Exchange Commission (SEC) and approved for membership by the Financial Industry Regulatory Authority (FINRA). StartEngine connects early-stage and growing companies seeking capital with investors seeking new investment opportunities. With this approval, StartEngine can operate as a funding portal for offerings under Regulation Crowdfunding and begin posting security offerings when Regulation Crowdfunding goes effective on May 16, 2016.
Regulation Crowdfunding was created pursuant to Title III of the Jumpstart Our Business Startups Act (known as the JOBS Act) of 2012 which established an exemption from the securities registration requirements of the Securities Act of 1933 for companies to raise up to $1 million within a 12-month period. These offerings must be conducted by a funding portal, like StartEngine, or broker-dealer that is registered with the SEC and a member of FINRA.
“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.”
Regulation Crowdfunding requires issuers to file with the SEC a disclosure and information statement on Form C, including financial statements and risk factors, and display that information for at least 21 days on StartEngine’s funding portal atwww.startengine.com to help investors fully understand an investment. Additionally, Regulation Crowdfunding includes annual reporting requirements that issuers must meet.
Issuers on StartEngine’s portal can sell common stock, preferred stock, and debt securities to any investors at least 18 years old who register on the site. Investors are subject to investment limits within a 12-month period based on income or net worth and common sense ability to bear the risk of loss of the investment. The issuers are able to create a campaign page viewable by the public that includes the required Form C filed with the SEC, videos, and communications among interested parties about the offering.
“Historically, small and emerging companies did not have access to traditional capital-raising methods such as bank debt, angel financing, or venture capital funding. We believe that every startup should have the opportunity to grow,” said StartEngine Executive Chairman and Cofounder Howard Marks. “StartEngine provides an alternative way to finance. 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.”