Kevin O'Leary-backed venture creating new asset class during crisis

Venture capital through crowdfunding is a new way investing for retailers, and contrary to traditional venture capital, this asset class has seen increased activity during the pandemic, said Howard Marks, CEO of StartEngine.

“StartEngine is a crowdfunding equity platform. Our mission is to help entrepreneurs achieve their dreams and we raise capital for equities directly from the general public online. Since the crisis has started, our number of investors has gone up on our platform,” Marks told Kitco News.

The outbreak of the coronavirus has essentially shut down mainstream venture capital, Marks said.

“It’s very clear at this point, that access to capital for small businesses has been basically shuttered. A lot of the venture capitalists are now internally working with their own portfolio, deciding which company they will build to continue to fund and which one they won’t. Companies who were looking for capital had term sheets ready, everything is just shut down at this point,” he said.

For entrepreneurs, raising capital through crowdfunding is an “extraordinary new way to market your company,” owing to a few unique benefits, Marks noted.

“You should consider equity crowdfunding as a means for raising capital. The main reason is that you want to stay in control, you’re not giving control to anybody,” he said. “Number two, you create an army of fans. These investors could be your best customers, they could also be your army of grand ambassadors.”

 

By Kitco News

David