With equity crowdfunding opening up to regular average joes, non-accredited investors in 2016, and the private startup space becoming increasingly democratized and available to all, there are now more options than ever before as to which platforms to invest in. The question is, which one is the best equity crowdfunding platform? Let’s take a look at the biggest ones available and see which ones you are able to invest on. This analysis will look at Canadian and US investors only, and look at the majority of investors, non-accredited investors. Many platforms are available for accredited investors not covered here.
StartEngine
StartEngine as an equity crowdfunding platform, enabling businesses to secure funds by directly offering shares or tokens to the general public. It was founded in 2015 and is based in Los Angeles, California. StartEngine provides a platform for entrepreneurs to showcase their business ideas and investment opportunities to a wide range of potential investors. It has facilitated funding for various types of businesses, including startups and small businesses, across different industries. Through StartEngine, companies can offer securities under Regulation Crowdfunding (Reg CF) and Regulation A+ (Reg A+) of the JOBS Act, enabling them to raise funds from both accredited and non-accredited investors. StartEngine had the 2nd highest amount of capital raised for companies in 2022 at approximately $131 million, and is expanding rapidly including its acquisition of SeedInvest, another equity crowdfunding platform. StartEngine has stringent requirements for companies looking to raise capital, with just a reportedly 2–3% of companies applying being accepted to raise money for.
StartEngine also offers a bonus shares program, with members getting an additional 10% bonus shares on each investment. This also includes lower trading fees, 4% instead of 5% when selling shares on the secondary market, and front-line access to new launches in case there are waitlists. This comes with a cost of $275 a year. For investors who plan to invest in multiple companies for decent dollar amounts over $2750 annually to recoup the shares fees, this would figure to offer good long term value. Some companies may charge the 3.5% fee from investors at time of investment that StartEngine charges the companies.
StartEngine is currently also offering a very generous referral program. Every new person who signs up for StartEngine, without need of purchase or deposit, will receive 4 shares of StartEngine. This would normally cost $25 each. With the ability to refer up to 25 people, this is a whopping $2500 USD in free shares of StartEngine itself. Not bad for a referral program.
US investors can currently invest, while Canadian investors cannot.
Republic
Republic.co is an online investment platform that focuses on equity crowdfunding and token offerings. It was founded in 2016 and is based in the United States. Republic.co allows individuals to invest in a diverse range of private startup companies and other investment opportunities. The platform offers both accredited and non-accredited investors the chance to participate in early-stage investments, which were traditionally limited to wealthy individuals and venture capitalists. Republic.co also facilitates token sales, where companies can issue and sell tokens to fundraise for their projects. The platform aims to democratize investment opportunities by providing access to a wider pool of investors and supporting a community-driven approach to funding startups and innovative projects.
Republic had the 3rd highest capital raised for companies in 2022 at $91 million. There are no fees to investors as they are all absorbed by the startups raising, and currently screen to allow only 2% of companies onto the platform to raise money.
US investors can invest, and Canadian investors can invest as well, excluding residents of Ontario.
Wefunder
Wefunder operates as an equity crowdfunding platform, empowering individuals to participate in investments within startups and small businesses. Founded in 2012 and headquartered established in San Francisco, California, Wefunder provides a platform for companies raise their capital by selling shares of their business to the general public. The platform operates under the framework of Regulation Crowdfunding (Reg CF) and Regulation A+ (Reg A+) of the JOBS Act, allowing both accredited and non-accredited investors to participate in investment opportunities.
Wefunder aims to democratize investment by giving individuals the opportunity to invest in early-stage or startup companies that they believe in, potentially earning financial returns if the companies succeed. The platform focuses on a wide range of sectors and provides investment opportunities for various types of businesses, including technology startups, consumer products, and social enterprises.
In addition to equity crowdfunding, Wefunder also offers Regulation D offerings, which are limited to accredited investors, and has expanded its services to include revenue-based financing and secondary trading of securities. Overall, Wefunder’s goal is to make investing more accessible and support entrepreneurship by connecting startups with a diverse community of investors.
Wefunder had the most capital raised for its companies in 2022, counting approximately $173 million. Investors will pay a 2% fee upon investing in each startup, up to a maximum of $100 each.
US investors are able to invest, while Canadian investors are welcome as long as they are not from Quebec, Ontario or Alberta.
Summary
In total, the top three platforms in Wefunder, StartEngine, and Republic ended up raising 80% of equity crowdfunding (Reg CF) funds in 2022, at $394.5 million, just shy of $400 million. From a non-accredited investor point of view, it makes sense to consider investing with these three platforms as they will be more likely to attract the best companies, given the higher likelihood of raising more money. That said, a startup is able to raise money from multiple sources, including potentially all 3 of these platforms. If one is able to invest in multiple of these sites, it makes sense to scour all the opportunities available and invest only in the best ones regardless.
Disclaimer
This is not Financial Advice. This article is meant only for educational and perhaps entertainment purposes.