StartEngine, a leading investment crowdfunding platform operating in the US, says it is on pace for a record year. To date, the platform reports over $50 million having been raised by issuers leveraging the Reg CF (Regulation Crowdfunding) securities exemption as well as Reg A+/Reg D506 c.
Under Reg CF, a company may raise up to $1.07 million from both accredited and non-accredited investors. The offering must be hosted on a FINRA regulated “funding portal” or broker-dealer. The highly structured exemption incorporates certain requirements to raise capital under Reg CF. The many compliance items have been criticized as restraining the ability of issuers to raise the money they need. Shortcomings in the process may have hobbled its success but a growing number of funding portals are entering the market as the sector of online capital formation appears to be generating more traction.
StartEngine reports that of the $50 million raised during 2020 the funds went to 132 different companies with investors from 130 different countries. Of note, StartEngine states that a single investor committed $75,000 to a single offering. As of today, 83 issuers are raising capital on StartEngine.
The Securities and Exchange Commission (SEC) is in the process of reviewing the “exempt offering ecosystem” – which includes Reg CF. One of the items on the table is to increase the max raise under Reg CF to $5 million – a move that may encourage even more issuers to utilize the exemption.