Are you an investor on StartEngine looking to sell your shares? You’ve come to the right place. StartEngine is a popular equity crowdfunding platform that allows both accredited and non-accredited investors to invest in early-stage startups. While investing in these startups can be exciting, it’s important to know how to sell your shares when the time comes. In this article, we will guide you through the process of selling StartEngine shares, including the different types of shares, the StartEngine secondary market, and important considerations to keep in mind.
About StartEngine
StartEngine was founded in 2014 and has quickly become one of the leading equity crowdfunding platforms in the United States. It is a Regulation Crowdfunding (Reg CF) platform, which means that it allows startups to raise capital from a large pool of investors. This type of offering is typically smaller than traditional venture capital rounds and is open to both accredited and non-accredited investors.
StartEngine has helped over 375 companies raise more than $200 million in funding from over 250,000 investors. Some notable companies that have successfully raised funds on StartEngine include electric car company Arcimoto and plant-based meat company Beyond Meat.
Types of StartEngine Shares
Before we dive into the process of selling StartEngine shares, it’s important to understand the two main types of shares that you can purchase on the platform.
Common Stock
Common stock is the most common type of share on StartEngine. When you invest in common stock, you are purchasing ownership in the company. As a common shareholder, you have voting rights and are entitled to a share of the company’s profits. However, it’s important to note that as an early-stage startup, the company may not be profitable yet, so you may not receive any dividends.
Preferred Stock
The other type of share available on StartEngine is preferred stock. This type of share typically offers a fixed dividend and has priority over common stock in the event of a liquidation. Preferred shareholders do not have voting rights, but they do have a higher claim on assets and profits compared to common shareholders.
How to Sell StartEngine Shares
Now that you understand the types of shares available on StartEngine, let’s dive into the process of selling your shares. Here are the steps you need to follow:
- Determine if you are eligible to sell your shares: Before you can sell your StartEngine shares, you must meet certain eligibility requirements. These include being a verified investor on the platform and owning at least $10,000 worth of shares in a single company.
- Find a buyer: The first step in selling your shares is finding a buyer. You can either find a buyer on your own or use the StartEngine secondary market, which we will discuss in more detail later in this article.
- Negotiate the price: Once you have found a buyer, you will need to negotiate the price of your shares. Keep in mind that the price of your shares may be influenced by factors such as the company’s performance, market conditions, and demand for the shares.
- Complete the necessary paperwork: Once you have agreed on a price with the buyer, you will need to complete the necessary paperwork to transfer ownership of the shares. This includes signing a purchase agreement and completing any required forms from the company.
- Transfer the shares: After the paperwork is completed, the shares will be transferred to the buyer’s account. It’s important to note that this process can take several weeks to complete.
StartEngine Secondary Market
The StartEngine secondary market is a feature that allows investors to buy and sell shares in companies that have raised funds on the platform. This market provides liquidity for investors who want to sell their shares before the company goes public or gets acquired.
To access the secondary market, you must be a verified investor on StartEngine and own at least $10,000 worth of shares in a single company. The secondary market is open for trading on Tuesdays and Thursdays from 9:30 am to 4:00 pm PST.
It’s important to note that not all companies on StartEngine are eligible for the secondary market. Companies must meet certain criteria, such as being current with their SEC filings and having a minimum number of shareholders, to be listed on the secondary market.
Benefits of Selling StartEngine Shares
There are several benefits to selling your StartEngine shares, including:
- Liquidity: As an early-stage investor, it can be challenging to sell your shares before the company goes public or gets acquired. The StartEngine secondary market provides liquidity for investors who want to sell their shares.
- Diversification: By selling your shares, you can diversify your investment portfolio and reduce your risk. Instead of having all your money tied up in one startup, you can invest in multiple companies on StartEngine and sell shares in different companies as needed.
- Profit-taking: If the company you invested in has seen significant growth, selling your shares can allow you to take profits and potentially reinvest them in other opportunities.
Considerations Before Selling
Before you sell your StartEngine shares, there are a few important considerations to keep in mind.
Taxes on StartEngine Share Sales
When you sell your StartEngine shares, you may be subject to capital gains taxes. The amount of tax you owe will depend on how long you held the shares and your tax bracket. It’s always a good idea to consult with a tax professional before selling any investments to understand the potential tax implications.
Account Transfer
If you are selling your shares through the StartEngine secondary market, the shares will be transferred to the buyer’s account. However, if you are selling your shares outside of the secondary market, you will need to transfer the shares to the buyer’s account manually. This process can take several weeks to complete, so it’s important to plan accordingly.
Waiting Period
There is a waiting period before you can sell your StartEngine shares. This waiting period varies depending on the type of offering and the company’s specific terms. It’s important to read the company’s offering documents carefully to understand any restrictions or waiting periods that may apply.
Other Important Information
Here are a few other important things to keep in mind when selling your StartEngine shares:
- Fees: StartEngine charges a 2% transaction fee for all sales on the secondary market. Additionally, there may be fees associated with transferring the shares to the buyer’s account.
- Market volatility: The price of your shares may fluctuate due to market conditions and demand for the shares. It’s important to consider these factors when negotiating the price with a potential buyer.
- Company performance: The value of your shares may be influenced by the performance of the company. If the company is not performing well, it may be challenging to find a buyer for your shares.
Conclusion
Selling your StartEngine shares can be a complex process, but with the right knowledge and preparation, it can be a smooth and profitable experience. It’s important to understand the different types of shares available on StartEngine, the steps involved in selling shares, and important considerations to keep in mind. By following the guidelines outlined in this article, you can confidently navigate the process of selling your StartEngine shares and potentially reap the rewards of your early-stage investments.
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