Interview with Howard Marks, the CEO of Startengine; ICO 2.O for Safe and Secure Investments.
Howard Marks is the founder and CEO of Startengine, a groundbreaking startup crowdfunding platform dedicated to assisting entrepreneurs in realising their ambitions by providing them with more equitable access to financing. In this interview, Howard will explore the unique qualities of Startengine as well as the prospects for investors to benefit from them.
1) Could you please tell us your name and a little about you?
Welcome to StartEngine, where I’m the co-founder and CEO of the company, which is a premier equity crowdfunding platform. My previous work experience includes software development and the video gaming industry. I co-founded Activision Blizzard in 1991 and helped transform the struggling firm into a $50 billion market capitalization leader in the video gaming industry. While working at Activision from 1991 to 1997, I held the position of Chairman of Activision Studios, where I was instrumental in helping the company become an industry leader and sell millions of games.
Following my time at Activision, I went on to start Acclaim Games, a publisher of online games that is now a division of The Walt Disney Company. Los Angeles Business Journal named me one of the 500 most influential individuals in Los Angeles in 2015, and I won the 2015 “Treasure of Los Angeles” award for my efforts to develop the city into a premier technology metropolis. I am also trilingual and a citizen of three countries: the United States, the United Kingdom, and France.
2) What is the purpose of StartEngine?
Having gained valuable knowledge in the video game sector, I wanted to invest and assist other entrepreneurs in their endeavours. I set a personal goal of investing in 60 startups over the course of the year. It was with this goal in mind that I founded StartEngine in 2012 as an accelerator to help companies grow. However, I quickly discovered that companies that came through the accelerator had a difficult time raising capital for their businesses, particularly when the founders were not white men with Stanford degrees and connections to venture capitalists.
During my tenure as the director of this accelerator, I came across something very remarkable: a piece of legislation known as the JOBS Act, or the Jumpstart Our Business Act, which would allow members of the general public to invest in early-stage firms. It was previously reserved for wealthy accredited investors, who made up a very small percentage of the population at any given time.
I recognised the potential for the JOBS Act to disrupt the financial sector because, for the first time, there was a meaningful solution to the problem of access to capital. The crowd can provide capital to a firm if it cannot obtain funding from institutional investors. Users, friends, and anyone who come across the offering online can all contribute funds to the company. On the other hand, the general public may be able to participate in these early-stage funding rounds, which, as any investor will tell you, is risky. However, it provides the general public with the opportunity to earn lucrative returns that are not possible once a company goes public, which has historically been the only time the general public could invest.
In 2014, I and my co-founder Ron Miller transformed StartEngine into an equity crowdfunding platform, which makes advantage of the JOBS Act to assist firms in raising cash by selling securities (common stock, debt, convertible note, and other types of assets) to investors through the internet.
3) What are the most important features and services that StartEngine offers its customers?
The fact that StartEngine is an SEC-registered financing portal implies that our platform is authorised to conduct Title III Regulation Crowdfunding offerings. Moreover, we provide products that are compliant with Regulation A+ and Regulation D 506 (c). We enable the equity crowdfunding process, which means that we assist companies in preparing and filing their offering with the SEC, as well as facilitating investor payments via credit card, ACH, wire transfer, and Bitcoin, among other methods.
We provide rolling closing on our platform, which means that companies can withdraw funds received while the offering is still in progress. We also provide a premium package, which allows investors to benefit from in-house accounting, legal, and marketing expertise.
4) Explain what ICO 2.0 is, what has changed, and how this will benefit the future of initial coin offerings.
ICO 2.0 is a phrase we invented last fall to refer to an initial coin offering (ICO) that is regulated. In 2017, initial coin offerings (ICOs) raised $5.6 billion, although the vast majority of those ICOs were unregulated. This was a concern because it became out that the vast majority of initial coin offerings (ICOs) were actually sales of securities. The Securities and Exchange Commission (SEC) stepped forward last winter, issuing dozens of subpoenas and stating publicly that initial coin offerings (ICOs) were the sale of securities and so required to be registered as such. It doesn’t get any clearer than this. When we started hosting ICOs on StartEngine in the fall of 2017, we made it a point to only host those that complied with US securities laws, such as those that used Regulation Crowdfunding, Regulation A+, or Regulation D 506(c), which are the same rules that apply to the rest of the offerings on our platform.
ICOs should be transformed into a regulated fundraising model, in order to safeguard investors from being duped by fraudulent offerings. I believe this will help the sector as a whole. Companies conducting initial coin offerings (ICOs) will have to put in more effort up front in a regulated marketplace, but investor engagement will increase in the long run as regulation produces a safer, more uniform marketplace and a more positive user experience for investors.
5) Could you please walk us through the StartEngine platform and explain how it works?
It is necessary to determine how much capital a firm wishes to raise as well as the structure that will be used (whether they sell shares, debt, convertible note, etc). This is entirely up to the corporation; they determine their own valuation as well as the terms of the transaction. Our staff assists businesses in preparing for their raise, completing the necessary documentation, and, in some situations, conducting an audit. A fixed fee or a percentage of the total capital raised by a firm is charged depending on whatever exemption is employed (Regulation Crowdfunding, A+, or D 506(c)). Investors can browse offerings on our platform in the same way that backers do on Kickstarter, and they can make direct investments on our platform as well.
6) Would you be willing to tell us about some of the startups that you have assisted in their success?
More than 160 companies have successfully raised finance on our platform to date, which means there are a lot of them out there. It was a huge success for us to launch our first ever offering, Elio Motors, which raised $17 million from 6,600 investors. Golfboard, GeoOrbital, xCraft, Rayton Solar, and tZERO are some of the other notable achievements.
7) Do you have any investment opportunities in the StartEngine business that are now available?
Yes, there are now over 100 products available on www.startengine.com that are accepting investment funds at this time. We are also testing the waters for our own initial coin offering (ICO), which will raise $10 million at a price of $10 per share. While our initial coin offering (ICO) is presently being reviewed by the SEC, investors can reserve their shares at this time.
8) What’s next on your to-do list, and where do you envision the StartEngine business in the next three to five years?
Launching StartEngine Secondary, which is our secondary trading platform where investors may buy and sell assets, will be the next major milestone for StartEngine in the coming months. We have applied to the Securities and Exchange Commission (SEC) to become a broker-dealer and an ATS (Alternative Trading System) so that we can handle this secondary trading marketplace ourselves rather than outsourcing it to a third party. We are also developing a patent-pending blockchain technology called LDGR, which will tokenize securities on our platform, track their trading, and improve the transparency of our secondary market by increasing the number of transactions.
Investor trading will increase liquidity in privately held assets, allowing investors to leave at a much earlier stage, which is very attractive for our industry. According to traditional business practises, investors in startups must wait 7-9 years before seeing a return on their investment. Investors will now be able to trade those securities immediately or after a one-year trading lock has been placed on them. Increasing investor interest in our platform, as well as driving additional investments and assisting companies in raising more capital, I believe, will result as a result of this.
I anticipate that StartEngine will continue to grow in the next three years. Every year, rather than hundreds, we will be launching thousands of companies and thousands of investors will be actively trading their tokenized investments on Secondary, which will be a first in the industry. As a complete stack platform, we will allow corporations to issue securities and investors to trade them simultaneously all on the same platform.
9) Can you tell us about your hardworking crew and excellent customer service?
Over the past year, our team has more than tripled in size, and we currently number slightly more than thirty persons. Despite our rapid expansion, our hiring procedure remains rigorous. Every member of our team is committed to our aim of assisting entrepreneurs in realising their goals and ambitions. The fact that we are disrupting the financial industry means that only a small number of our team members have backgrounds in institutional finance; nonetheless, we are all specialists in the JOBS Act and securities laws. We have creative, marketing, legal, and accountancy services that are all focused to assisting our clients in launching their businesses and raising funds.
10) How safe is StartEngine, and would you be willing to discuss your legal and security precautions with our readers?
Beginning with the fact that all offerings on our platform are subjected to bad actor checks, and each offer must pass through our due diligence process and receive approval from our compliance team, StartEngine is a safe platform. Keep in mind, though, that this is a very early-stage investment. This is a high-risk investment, and the normal investment advice to diversify your portfolio and not invest more than you can afford to lose applies to StartEngine’s platform as well as any other.
11) Do you have any further information that our readers should know?
For anyone interested in raising funds or making an investment on StartEngine, the website www.startengine.com should be visited. You can also send me an email at email@example.com if you have any questions. Last but not least, I write a lot about regulation on Medium. Here’s where you can find my writing: https://medium.com/@howardmarks