How To Invest In Private Companies on StartEngine

Last week in The Juice, we discussed how to invest in startups online. 

Yesterday, we highlighted a couple of specific opportunities, both on a platform we really like called StartEngine. In that Juice we showed how you can actually invest in StartEngine itself. What a way to double down on your bullishness in private equity investing for everyday investors. 

You’ll find links to both Juices, along with a solar stock idea to buy on the Trump-related carnage from one of our financial media partners, BarChart, in today’s Freshly Squeezed section.  

As we have mentioned, StartEngine is a platform that gives investors access to both investing in startups as well as the opportunity to purchase shares in some of the largest private companies via StartEngine Private. The firm calls StartEngine Private “your portal to gain exposure to venture-backed businesses without spending millions.” 

One potential downside of StartEngine Private is that it’s only open to accredited investors. The SEC defines what that means here. But, basically, you have to be somewhat wealthy. Like we said, the playing field has improved, but it ain’t level!  

So, how to get started on StartEngine and what does The Juice think of the onboarding process and subsequent user experience?

When you go to StartEngine’s website, you’ll see something like what you see captured above. There’s always a promotion of one of the platform’s biggest opportunities. In this case, an AI investment in the food security space. This alone highlights how far we have come. It used to be that retail investors couldn’t sniff investments in these types of cutting-edge private firms. 

Anyhow, from there, as you would any other financial services account, you click “Sign Up.” 

It’s actually easier to sign up on StartEngine than it was at the last brick and mortar bank we opened an account with (don’t ask). 

You can sign up and subsequently sign in with an existing Google, Apple or Facebook account; go the old school email/password route; or download the StartEngine app and create your account from there. 

We went the traditional route and created our account online. 

You have to answer questions about who you are, your financial situation and your investment-related situation. All straightforward stuff. Then, after StartEngine approves your account you’re ready to invest in opportunities. 

To illustrate, we went right to the AI food security company. If you scroll down the page, you get loads of information, including reasons to invest, profiles of the management team, the problem the company looks to solve, the opportunity that exists to solve it, a market profile, updates from the company and investment terms, along with rewards available at different investment levels. 

Pretty much every company on StartEngine provides this level of information or more. 

One of the cool things is being able to see the cost per share. In this case, it’s $16.43 per share. You’ll have to read closely and conduct additional due diligence to make sense of the value proposition related to the share price. It’s not as easy as it is with public companies. 

You’ll also see if you exceed regulatory limits, as was the case in our example above. 

As far as selling your shares goes, read StartEngine’s FAQs closely for details, but you’ll only be able to do it, at the moment, on StartEnginge’s secondary market. Not all companies qualify to put their stock on the secondary market and not all will choose to do so. They must have had a previous funding round on StartEngine to do so, but they’re not obligated to list. And, even if they do, there has to be demand for the shares for you to be able to sell them. 

This is a risk inherent in private equity investing. But, at least, you have some sense of the value and, potentially, an opportunity to exit before an official exit, which can take time. 

These types of investments are not get rich quick schemes. They’re another way speculative and long-term investors can further diversify their portfolios. 

The Bottom Line: While The Juice can’t recommend all of the investments on StartEngine, we highly recommend the platform itself as a way to participate in venture capital. It’s straightforward and, as you navigate the site, StartEngine makes it easy to find opportunities based on sector and other factors, including the size of an opportunity or its popularity on StartEngine. 

As The Juice continues our ongoing series on alternative investing, we’ll look more closely at Fundrise, Yieldstreet and WeFunder, just to name a few. Tomorrow, we consider another area of alt investing: collectibles, such as art. 

We’re doing all of this to get you up to speed on alts and prepare for the new years, when we’ll show you how to best blend the traditional with the alternative in your investment portfolio.

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