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   Technology StocksEquity Crowdfunding

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From: Thehammer6/16/2020 10:47:33 AM
1 Recommendation   of 44
Kevin O' Leary AKA "Mr. Wonderful" has invested in and became a paid spokesperson for StartEngine. Several good videos here.

I have been investing in various private companies for several years and those investments include StartEngine which helps connect investors with start ups.

When I worked in financial services, I was precluded from investing in initially hot IPOs and that was later extended to any IPO. These investments are certainly very risky but also a potentially an opportunity to get into the next "big thing" earlier than an IPO.

After 3 years. I am even more positive on the concept. Initially, considering my financial services background, my major concerns centered on unsophisticated investors investing their rent money in some really bad companies. Some of that has happened but not to the extent that some folks have gotten burned with digital currencies.

The "Jobs Act" gave entrepreneurs increased access to capital markets. After 3 years, I am convinced that more and more start ups will seek this avenue to grow their company. It probably isn't for the "mom and pop" corner grocery store and I typically look for investments that have the potential to scale the business geometrically.

It seems that many startups receive some level of funding from "friends and families" and perhaps some early adopting clients who feel in love with the concept. Equity Crowdfunding opens up whole new venue for a capital raise beyond bank loans, VC's or angel investors. With these large investors you typically give up considerable control as well as board seats. I see two big advantages with Equity Crowdfunding from the company perspective. The first is that you can expand your client base mainly to individuals who utilize your product and are aligned with your vision. Secondly, you maintain a much greater degree of control.

From an investor perspective, these investments are not liquid and some (there are 3 categories of crowdfunding) only allow the investment to be sold after 1 year (assuming there is a market). StartEngine has applied to become a dealer and start a secondary market, but I assume that will only apply to some of the companies that used their platform.

For the time being, these are long term investments and many will probably go to zero. That is why I take a portfolio approach and don't commit a whole lot of money. I have invested multiple times in a few of them that have appeared to be doing well and come back for additional funding.

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From: Thehammer7/20/2020 9:58:38 AM
   of 44
I placed several small investments in a company called Knightscope which makes robotic security systems. They have received quite a few contracts recently. May be one of the largest crowdfunding investments ever accomplished as they surpassed $20 million. By the time anyone reads this, I suspect the fund raise will have closed but at time of posting there are 17 hours remaining.

I was hoping to engender some discussion on this board of potential pre -IPO investments. Since all my career was spent in Financial Services, I was always precluded from investing in IPOs. I like the crowdfunding concept but the investments are not liquid, but I believe the concept has merit for companies raiding capital and investors seeking to get into new investments in a stage previously difficult to attain.

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From: Thehammer8/5/2020 2:51:00 PM
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Startengine has started to do TV spots with Mr. Wonderful as spokesman.

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From: Glenn Petersen11/4/2020 5:51:39 PM
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The SEC Just Made Crowdfunding Way More Interesting for Small Startups

John Biggs
Monday 4:11PM, November 2, 2020

Tech funding usually happens in one of two ways. In one scenario, a software or service product— think Twitter — usually sells equity to venture capitalists who expect some kind of return on their investment. Hardware products usually go the crowdfunding route, building up a list of pre-orders that they can then use to pay for manufacturing.

Recently, however, a new Securities Exchange Commission ruling allows small companies to crowdfund equity raises, albeit in ways the aim to keep small investors safe from financial sharks. Using something called Regulation Crowdfunding, the companies were able to raise up to $1.07 million from non-accredited investors (aka you and me). Now, thanks to an update in the rules, they can raise up to $5 million in the same way hardware startups can raise millions on Kickstarter, but instead of delivering a product, these Reg Crowdfunding companies deliver profits or equity.

What this means in practice is that the alternative stock market just got a whole lot bigger. Because nearly any company can run a Regulation Crowdfunding round, you can buy a part of a small company in the same way you can invest in Apple or Amazon. Further, the SEC is “removing investment limits for accredited investors” and is now taking into account salary or net worth when it comes to limiting investments by non-accredited investors, meaning it can approve your investment to a certain income level.

Why should you care about this? Well, if you’re a small software maker, manufacturer, or, hell, restaurant owner you can use this technique to go to the general public to support your business. Because the investment cap is so much higher now, you can feasibly raise enough for business expansion, product development, or geographic growth. Regulation Crowdfunding is still looked at as something suspect by so-called professional investors, but it’s nice to know you can kick in a couple of bucks to help your buddy’s model rocketry business take off.

The real benefit, however, is the removal of VCs from the tech startup business. By allowing founders and companies with strong communities and popular products to raise from Average Janes and Joes, the ruling levels the playing field considerably. While equity crowdfunding isn’t quite taking off just yet, this move to expand it could bring new technology to the fore that isn’t dependent on the whims of some big money VC in Silicon Valley.

There are other parts of the ruling including so-called demo day communications that let startups talk about their fundraiser on stage or online, “permitting an issuer to use generic solicitation of interest materials to ‘test-the-waters’ for an exempt offer of securities prior to determining which exemption it will use for the sale of the securities.” In other words, you can tell people about your investment opportunity to see how many will bite.

It’s all a bit wonky, but it just means that it got easier to invest in small companies you love and, provided they don’t implode, reap rewards from small businesses just as you would from the stock market.

Story Link

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To: Glenn Petersen who wrote (27)11/4/2020 10:32:22 PM
From: Thehammer
   of 44
Hi Glenn,

Thanks for posting this. I did receive the following from StartEngine who has been advocating for the changes.
They summarized as follows:

Increasing the maximum amount companies can raise from $1.07M to $5M.Amending the investment limits for investors by 1) removing investment limits for accredited investors and

2) using the greater of their annual income or net worth when calculating the investment limits for non-accredited investors.

Extending Reg CF's COVID-relief measures for an additional 18 months.

Permitting “test-the-waters” communications, which allows issuers to solicit interest from investors prior to filing the offering documents and can help issuers determine which exemption (Regulation Crowdfunding or A+) to use.
Permitting “demo day” communications that would not be deemed general solicitation or general advertising.
Permitting Special Purpose Vehicles in Regulation Crowdfunding offerings.

Also will note that Kevin O'leary of Shark Tank fame has taken a position and is a paid shill for StartEngine. Just recently started a secondary market for these securities although the only one trading currently is StartEngine. They plan to add more but there are quite a few operational hurdles to trading these securities.

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From: Thehammer12/20/2020 6:26:51 PM
   of 44
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.

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From: Thehammer12/21/2020 10:26:53 PM
   of 44
Howard Marks and Kevin O' Leary on raising capital in todays environment:

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From: Thehammer12/22/2020 1:19:19 PM
   of 44
I threw a few bucks at this one.

Solar Roadways® | StartEngine

It was oversubscribed in over 24 hours. Company has been around for quite some time and has been making steady progress' From their overview:

Solar Roadways® is the first company to develop Solar Road Panels, which opens up a brand-new market for the solar industry: all walking and driving surfaces. Solar Road Panels are intelligent, modular, strong infrastructure panels which have solar cells to produce clean energy in places where it was previously impossible: parking lots, sidewalks, driveways, bike paths, roads, playgrounds, airports, etc. Solar Roadways®’ research and development has been funded by three U.S. Department of Transportation contracts. Our goal is to modernize the infrastructure with modular, intelligent panels while producing clean renewable energy for homes, businesses, and cities.

Was hoping to get some dialogue on CF investments. Not for traders since time frame is often 5 years. My feeling is that IPO initiation much of the money has already been made.

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To: Thehammer who wrote (17)12/30/2020 11:13:24 PM
From: rebeccaaw
   of 44
Much obliged for the data you shared, I will get in touch with them now! fall guys

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To: rebeccaaw who wrote (32)12/30/2020 11:18:48 PM
From: Thehammer
   of 44
Thanks, I was hoping to get some discussion regarding non public investments via crowdfunding. I have used Start Engine and Wefunder but there are others. Seems that some viable startups prefer equity crowdfunding to more traditional means. Start Engine is interesting because they have started a secondary market but currently only trade their own shares.

Some of the startups are really good about keeping investors in the loop, others are terrible.

Let me know how you fare!

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