​StartEngine's New Secondary Market Extremely Disruptive to Capital Markets

Michael Markowski |


StartEngine’s September 2017 launch of its StartEngine Secondary market for the shares of private companies which are valued for less than $1 billion has forever disrupted the capital markets. By the end of 2018, millions of investors will be pouring money into shares of private startup and emerging growth companies. The venture capital industry is now facing serious disruption. By the end of the decade the amount flowing into the private market will dwarf the capital that is provided by investors to public companies with market capitalizations at or below $300 million. By gaining an understanding on how and why this is happening you can put yourself in the position to capitalize.

StartEngine, a leading crowdfunding platform is the first to provide liquidity to the shareholders of small private companies. It’s also the first to enable unaccredited investors or the masses to purchase shares from the shareholders of private companies. For these reasons, StartEngine meets the qualifications of a first mover company. See Wikipedia first mover definition. StartEngine, is thus positioned to get to a market cap of $1 billion by as early as 2019 as compared to its existing market cap of $70 million. See my article “Shares of StartEngine poised to multiply by end of 2018”. View video below entitled “Why ‘First Mover’ companies are poised to receive instant $1 billion valuations” (3 min 50 sec):

The last significant change to the capital markets; the emergence of private market places in 2009 to create liquidity for the shares of the social media companies LinkedIn and Facebook, etc., having valuations in excess of $1 billion was the result of the dotcom bubble bursting in 2000. The decline of the NASDAQ by 80%, from its March 2000 peak to its October 2002 trough, virtually guaranteed that IPOs would never again be used to provide capital to startup and early stage digital or highly scalable companies. From 1996 to 1998, Yahoo, Ebay and Amazon had launched billion dollar IPOs when they were startups. Since then the shareholders of tech companies with valuations of a billion or greater have obtained liquidity from the private market places and their ultra-high net worth accredited investors. A February 2016 article entitled, “Secondary Shops Flooded with Unicorn Sellers”, revealed that the shareholders of unicorn companies were able to sell $47 billion of their shares in 2015, an increase of more than 80% as compared to 2014.



Private company shares purchased through a Title III or Title IV crowdfunding are liquid or sellable and purchasable by accredited and non-accredited investors alike. For a Title III it’s the first year anniversary date of the shares being purchased. Shares purchased through a Title IV offering become immediately liquid or re-sellable the day of purchase.

The ability for any and every investor to utilize StartEngine to sell the shares that they hold in a private company for the first time since 1933 when the SEC was formed regardless of their level of affluence or net worth and without having to utilize a broker, is revolutionary. The shareholders of an emerging growth company no longer have to rely on a specialist at a stock exchange (NYSE) or an over the counter NASDAQ market maker to sell their shares. They can list them for sale on StartEngine. The volatility of the share price of any private emerging growth company which utilizes Title III and IV to raise capital is substantially reduced when compared to the share prices of publicly traded emerging growth companies.

The biggest beef that investors have in investing in publicly held emerging growth companies is share price volatility. Can anyone recall the shares of any small company going straight up after they have been purchased? THEY ALWAYS GO DOWN. The reason why they go down before they go up is because the specialist at the NYSE or the NASDAQ market maker has to MANIPULATE the market in order to make a living. As soon as investors learn that the investments they make in private startup and early stage companies are much less volatile, the money will pour into private emerging growth companies. It’s now only a matter of time.

Due to StartEngine having a first mover advantage in online equity crowdfunding, a digital industry which is projected to become one of the largest industries in the world, it would not be surprising for its market cap to go to a billion or more by as soon as 2018. If StartEngine gets to a billion dollar valuation its share price could potentially be at $40 or above by the end of 2018. This would represent an eight fold increase as compared to the $5.00 price that StartEngine’s unrestricted shares can be purchased for via its Regulation A+ Tier II current offering.

For direct access to purchase the 100 share minimum or more of StartEngine’s current offering click here. A Trophy Investing video entitled, “StartEngine shares have the potential to multiply by 8 times as crowdfunding first mover” is available at www.trophyinvesting.com. For access to Trophy Investing’s ongoing research coverage on StartEngine subscribe to the FREE Trophy’s Prospects Newsletter.

Trophy Investing is a member based-investing community which excels in identifying the shares of startups and early stage companies that have the potential to multiply in price within three to five years after investment.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

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