|It would be nice if we could get more people interested in this thread. I will respond to the questions posed and perhaps add a few closing thoughts:|
If you are into equity crowdfunding, I will be glad if you can help me solve this misery.
· What made you venture into equity crowdfunding?
I was happenstance that I found the Start Engine website 3 years ago. I worked my entire career in Financial Services and was precluded from participating in any IPOs. In some regards this is better than IPO’s in that you are getting in before the company goes public. That also presents another set of risks including liquidity and potential loss of entire investment (that seems on par with many Biotech’s…)
One of the first investments that I made was into StartEngine itself. Founded by Howard Marks a cofounder of Activision and a recent investor / advisor is Mr. Wonderful of Shark Tank fame. I was in 2 years before him.
StartEngine has also started a secondary market for issues purchased on their platform but the only security trading thus far is StartEngine.
· On what basis did you choose your equity crowdfunding platform?
Most of my investments, have been on StartEngine but have done some others on WeFunder. There are several other platforms, but I have not investigated any others. I was extremely impressed with Howard Marks and I think he is the type to help drive the whole industry forward.
· How did you choose your investments?
Good question…I typically take a close look at the campaigns that have attracted the most capital AND those that happen to catch my eye. Also, if a company does well, they often come back for additional funding rounds and I often invest in subsequent tranches. My recent investmnets have included:
Knightscope – accompany that provides robotic security and associated software. A recent innovation was adding the ability to take temperatures. Many patents and robots already sold into multiple venues. Company has received quite a bit of positive press Knightscope | StartEngine
Hypersciences – company has a number of patents and working with mining / drilling leaders. They have patented a technology that drills up to 5 times faster than conventional means by utilizing supersonic “guns” to break apart the rock. Supposedly environmentally friending and aimed squarely at Geothermal energy. HyperSciences | StartEngine
Jet Token – “Jet Token is a private jet membership and booking platform for the ultra-modern age of aviation. For the first time, you will be able to use one app to book a private jet, a commercial airline ticket or both, all on the same itinerary.” Jet Token, Inc | StartEngine
Parallel Flight Technologies – “We’ve created patent-pending drone technology that will allow drones to carry heavy payloads for over two hours. This will make it ideal for use in fighting wildfires, search and rescue, and logistics missions. Our unmanned, autonomous aircraft open new possibilities for the safety of first responders and many other commercial applications.”
Parallel Flight Technologies | StartEngine
Liquid Piston – “develops advanced rotary internal combustion engines based on the company’s patented thermodynamic cycle and novel rotary engine architecture. Our engines are compact, powerful, quiet, efficient, low-vibration, multi-fuel capable and scalable from 1HP to over 1000 HP.” LiquidPiston | StartEngine
Many more – total over 40….
· Were you not scared that Startups have a high failure rate and you could lose every penny of your initial investment?
Yes, but I take a portfolio approach and spread the money around. It is seed money and I can afford to lose it all. However, I also invest in the Biotech market and use the same approach. Spread the money around. Many don’t pan out but a few home runs pay for the rest and then some.
· I know that Startup financials may not be transparent at times. Were you not scared as an investor that you had no in-depth auditing of what you were funding?
Yes, that is another concern, but I have also had lsuited companies that have had major accounting issues. There seems to be quite a few investors who are astute technically and financially and I tend to read the questions and answers. Some of the companies will also host calls and I usually ask a few questions.
· There is also a tenacity that estimated valuations on some startups might be wrong, meaning investments in them are priced at “estimated fair values.” These best-guess estimates may not reflect the actual amount that would be realized in a sale. How did you overcome this?
This is one of the main reasons that I would like to see the topic widely addressed here on SI. We have lots of experts and great minds if people are willing to weigh in. Personally [CH1] , I see this as a great opportunity, better in many respects than IPO. It is a good vehicle for investors but also good for people trying to raise capital in that investors are often clients and the corporation does not have to give up too much control to angel investors.
In the current market, I suspect that many listed securities are vastly overpriced.
· Did you prepare mentally, emotionally and financially to lose your entire investment in a particular funded startup?
I have invested for over 40 years and most of my investments are in DGI stocks. I have though had entire investmnets go belly up and again that is why I take a portfolio approach to investing. This is a very risky arena, but potentially a lucrative one as well. There is an obvious risk reward potential. I try to understand management especially if they have successfully launched other businesses and have a well-rounded team. Is it a concept that I believe makes sense? What is the market potential?
Other comments / concerns:
From the questions on the threads, it is apparent that many investors are unsophisticated. Since I have dealt with regulators in the past, there is potential for regulatory crackdown. The SEC though recently expanded the program and raised some investment limits.
I loved watching Shark Tank and this is an opportunity to be a mini-shark. It also could be lucrative if you invest in a company that eventually IPOs. I believe that Knightscope and StartEngine have the potential.