Secondary FAQ for Investors

Have questions about StartEngine Secondary? Get your questions answered here.

Sections

Overview

What Is StartEngine Secondary?

StartEngine Secondary is our investor trading platform. StartEngine Secondary is an Alternative Trading System (ATS) registered with the SEC and operated by StartEngine Primary, LLC (our wholly-owned broker-dealer subsidiary).

An ATS is an electronic trading system that matches orders for buyers and sellers of securities. It allows investors to trade shares purchased through Regulation A+, Regulation Crowdfunding or Regulation D for companies quoted on Secondary.

What companies will trade on StartEngine Secondary?

In the beginning, StartEngine Secondary will only be available to companies that have previously raised funding on StartEngine. Companies have to sign a quotation agreement with StartEngine Primary LLC to allow their investors to trade on StartEngine Secondary. Not every company that raises funding on StartEngine will trade on Secondary.

In the near future, it is possible that companies that have raised capital via Regulation Crowdfunding and Regulation A+ on other equity crowdfunding platforms trade on Secondary. We may even introduce other assets to Secondary besides shares in companies.

Who can trade on StartEngine Secondary?

U.S. residents over 18 years old can open an Investment Account. A U.S. bank account, a U.S. address, and a U.S. phone number are required to access StartEngine Secondary.

How does Secondary work?

Secondary allows investors to trade with each other in a peer-to-peer marketplace. Sellers can post offers to sell a specific number of shares by setting a minimum price. Buyers can post offers to buy a specific number of shares by setting maximum price. If a match is made, then the trade is executed. See below for more details.

How much does it cost?

For Companies: The first year of being listed on Secondary will be free. Subsequent years there will be a listing cost for the platform. Additionally, companies must be current with their fees for StartEngine Secure.

For Investors: Opening an account to trade on Secondary is free! Buying shares on Secondary is free! Selling shares on Secondary will incur a 5% transaction fee.

Investment Accounts

What is an Investment Account (and why do I need one)?

Your Investment Account is what will allow you to hold funds and trade on StartEngine Secondary. We require all users to open an Investment Account (which is part of, but separate from, your StartEngine Account). All funds in your Investment Account will be held by StartEngine Primary, LLC.

How long does it take to open and fund my Investment Account?

Timing can vary, but for most users, the process to open an account is under a few minutes, and funding your account takes one to two days.

Why do you require so much information?

We require personal information due to banking regulation.

We also require you to complete a suitability questionnaire to make sure your financial goals are in line with your investments.

Can I open an Investment Account as a Trust or an IRA account?

For now, accounts will be limited to individual cash accounts. We hope to add Joint, Trust, and IRA accounts at a future date.

How do I transfer funds to my account?

Once you open your Investment account, you can transfer funds from your bank. The name on the account you are transferring funds from should match the name on your Investment Account.

Can I use my Investment Account to invest on StartEngine.com?

The current iteration of the accounts do not have this feature, but it is in the product roadmap for the near future.

Why is my Investment Account pending?

If a red error shows in your Investment Account, please see if you can update your information within your account. If no error shows, or your account requires manual review, please reach out to contact@startengine.com.

How do I withdraw funds from my account?

You can withdraw funds from your Investment Account at any time after a 10 day waiting period (from the time of your initial transfer). Your withdrawal cannot exceed the funds available and the funds pending use in your account. Under certain conditions, you may be required to provide additional information for security purposes.

How do I change the bank account associated with my Investment Account?

You can only link one bank account at any given time to your account. If you would like to change your bank account, please reach out to us at contact@startengine.com.

Trading

How do I access StartEngine Secondary?

You can access StartEngine Secondary at https://secondary.startengine.com/. You will need to open an Investment Account if you have not already in order to access the platform.

What hours can I trade?

Investors can place orders on StartEngine Secondary at any time. However, each stock trading on StartEngine Secondary will have individual market hours. Market hours are the times at which our matching engine will match orders with each other. The market hours for StartEngine (the first company to trade on StartEngine Secondary) will be 1pm-3pm ET / 10am-12pm PT Monday-Friday.

What types of orders can I place on StartEngine Secondary?

Users can place limit orders 24/7, and clearing (matching limit orders) will only occur during market hours. We plan to add market orders at a future date, as well as other order types.

How do I submit an order on StartEngine Secondary?

Submitting a buy or a sell order is really straightforward! Head to your investment account at secondary.startengine.com, and select the “Trade” button in the top right corner. To the right of the page, you’ll see the trade widget. Select whether you want to buy or sell.

If you’re buying, enter the number of shares you’d like to purchase, and the maximum price you’re willing to pay.

If you’re selling, enter the number of shares you’d like to sell, and the minimum price you’re willing to accept for the shares.

To view the current buy/sell orders on the market, you can scroll down to the “Order Book” which will show you the current buy/sell orders. Enter a buy order above the lowest sell order, or a sell order below the lowest buy order to increase your chances of the trade being executed.

How long will it take for my trade to be executed?

Trade orders will only be executed during market hours for the security you wish to trade. For example, the market hours for StartEngine shares are Monday-Friday, 1pm-3pm ET / 10am-12pm PT. Trade orders expire after each day’s market hours. If your order is not cleared in that window, then you will need to resubmit your trade order again. If you have trouble finding a buyer or seller for your order, try adjusting your asking price!

Why was only part of my order filled?

We were able to fill part of your order at your desired price, but there wasn’t enough demand to meet your entire offer before your order expired. Trade orders are filled based on a few criteria. In order of priority, those are the asking price, the time the order was submitted, and then finally the size of the order. Try submitting the rest of your order another day or adjusting your asking price to fill the rest of your original order.

Can I cancel my order and get a refund?

You can cancel your order at any time before the order is matched by Secondary. After an order is matched, there is no possibility of a cancellation or a refund.

Note: if your order is partially filled, you will be unable to cancel the rest of our order. Your order will remain open until it expires at the end of the day. We are working to provide this ability in future updates. Thank you for your patience.

Who cannot trade on StartEngine Secondary?

At this time, employees of StartEngine Crowdfunding and their households are ineligible to trade on StartEngine Secondary as are “insiders”, as defined by the SEC. An “insider” is an individual that is a director, senior officer, entity, or individual that owns more than 10% of the publicly available shares. Similarly, at this time, employees of other companies trading on StartEngine Secondary can’t trade on StartEngine.

Individuals must not be, nor have an immediate family member residing in the same household, employed by or associated with any of the following: a broker-dealer, stock exchange, the Financial Industry Regulatory Authority (FINRA) or other financial institution.

Are there US state restrictions for trading on StartEngine Secondary?

Each security may have slightly different state rules. Investors in most states will not have any issues trading on StartEngine Secondary. However, some states have restrictions. Here is an example of what those restrictions look like for a specific security:

StartEngine shares are eligible to trade in all 50 states and both territories, with the following exceptions: investors in the states of Alabama, Kentucky, Montana, Pennsylvania, & Virginia are limited to 3 sell transactions per year across all securities eligible to trade (but investors are able to buy as much as they want).

If you have questions about the restrictions of a specific security, reach out to us at contact@startengine.com.

Are there market makers?

There are no market makers on StartEngine Secondary. A market maker is a participant or a company that actively buys and sells securities (in a National Market System) on both sides of the market in order to provide liquidity while profiting from the difference in the buy (“bid”) and sell (“ask”) spread.

How does StartEngine Secondary work for Regulation Crowdfunding Companies?

Securities purchased in a Regulation Crowdfunding transaction cannot be resold for one year. This means that investors cannot sell their shares that they purchased in a Regulation Crowdfunding offering on Secondary for one full year from the time of the initial investment if a company has signed a quotation agreement and is in good standing.

Thus, StartEngine Secondary is an option for Regulation Crowdfunding Companies 1 year after their offering and initial issuance of those securities, however, they must meet StartEngine’s listing requirements, which center around # of investors, valuation, total assets, and a sufficient number of available shares.

How does StartEngine Secondary work for Regulation A+ Companies?

Regulation A+ offerings do not have the same limitations as Regulation Crowdfunding offerings. StartEngine Secondary will initially be available for Regulation A+ offerings and issuances (shares issued in the offering) immediately. If a company agrees to be quoted on Secondary, they’ll be able to announce that their shares will become immediately tradable upon the close of their campaign.

Should I invest now or later? Should I buy this?

We cannot provide investment or financial advice. We are only able to help with issues related to the platform. If you have questions about investments or returns, please contact an investment professional for advice.

How do I contact someone at StartEngine?

You can reach us anytime at contact@startengine.com!

When the development of StartEngine Secondary is completed, a company which intends to apply to list its securities on the marketplace will be subject to certain requirements which it may or may not be able to satisfy in a timely manner. Even if a company is qualified to list its securities on the market, there is no guarantee that a demand for these securities will exist. Even if a company does meet the requirements for listing its securities, we do not know the extent to which investor interest will lead to the development and maintenance of a liquid trading market. You should assume that you may not be able to liquidate your investment for some time or be able to pledge these shares as collateral.

Important Message

IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. INVESTMENTS ON STARTENGINE ARE SPECULATIVE, ILLIQUID, AND INVOLVE A HIGH DEGREE OF RISK, INCLUDING THE POSSIBLE LOSS OF YOUR ENTIRE INVESTMENT.

www.StartEngine.com is a website owned and operated by StartEngine Crowdfunding, Inc. (“StartEngine”), which is neither a registered broker-dealer, investment advisor nor funding portal.

Unless indicated otherwise with respect to a particular issuer, all securities-related activity is conducted by regulated affiliates of StartEngine: StartEngine Capital LLC, a funding portal registered here with the US Securities and Exchange Commission (SEC) and here as a member of the Financial Industry Regulatory Authority (FINRA), or StartEngine Primary LLC (“SE Primary”), a broker-dealer registered with the SEC and FINRA / SPIC. You can review the background of our broker-dealer and our investment professionals on FINRA’s BrokerCheck here. StartEngine Secondary is an alternative trading system (ATS) regulated by the SEC and operated by SE Primary. SE Primary is a member of SIPC and explanatory brochures are available upon request by contacting SIPC at (202) 371-8300.

StartEngine facilitates three types of primary offerings:

1) Regulation A offerings (JOBS Act Title IV; known as Regulation A+), which are offered to non-accredited and accredited investors alike. These offerings are made through StartEngine Primary, LLC (unless otherwise indicated). 2) Regulation D offerings (Rule 506(c)), which are offered only to accredited investors. These offerings are made through StartEngine Primary, LLC. 3) Regulation Crowdfunding offerings (JOBS Act Title III), which are offered to non-accredited and accredited investors alike. These offerings are made through StartEngine Capital, LLC. Some of these offerings are open to the general public, however there are important differences and risks.

Any securities offered on this website have not been recommended or approved by any federal or state securities commission or regulatory authority. StartEngine and its affiliates do not provide any investment advice or recommendation and do not provide any legal or tax advice concerning any securities. All securities listed on this site are being offered by, and all information included on this site is the responsibility of, the applicable issuer of such securities. StartEngine does not verify the adequacy, accuracy, or completeness of any information. Neither StartEngine nor any of its officers, directors, agents, and employees makes any warranty, express or implied, of any kind whatsoever related to the adequacy, accuracy, or completeness of any information on this site or the use of information on this site.

Investing in private company securities is not suitable for all investors. An investment in private company securities is highly speculative and involves a high degree of risk. It should only be considered a long-term investment. You must be prepared to withstand a total loss of your investment. Private company securities are also highly illiquid, and there is no guarantee that a market will develop for such securities. Each investment also carries its own specific risks, and you should complete your own independent due diligence regarding the investment. This includes obtaining additional information about the company, opinions, financial projections, and legal or other investment advice. Accordingly, investing in private company securities is appropriate only for those investors who can tolerate a high degree of risk and do not require a liquid investment. See additional general disclosures here.

By accessing this site and any pages on this site, you agree to be bound by our Terms of Use and Privacy Policy, as may be amended from time to time without notice or liability.

Canadian Investors

Investment opportunities posted and accessible through the site will not be offered to Canadian resident investors. Potential investors are strongly advised to consult their legal, tax and financial advisors before investing. The securities offered on this site are not offered in jurisdictions where public solicitation for offerings is not permitted; it is solely your responsibility to comply with the laws and regulations of your country of residence.

California Investors Only – Do Not Sell My Personal Information (800-317-2200). StartEngine does not sell personal information. For all customer inquiries, please write to contact@startengine.com.

StartEngine Marketplace

StartEngine Marketplace (“SE Marketplace”) is a website operated by StartEngine Primary, LLC (“SE Primary”), a broker-dealer that is registered with the SEC and a member of FINRA and the SIPC.

StartEngine Secondary (“SE Secondary”) is our investor trading platform. SE Secondary is an SEC-registered Alternative Trading System ("ATS") operated by SE Primary that matches orders for buyers and sellers of securities. It allows investors to trade shares purchased through Regulation A+, Regulation Crowdfunding, or Regulation D for companies who have engaged StartEngine Secure LLC as their transfer agent. The term “Rapid,” when used in relation to transactions on SE Marketplace, specifically refers to transactions that are facilitated on SE Secondary, This is because, unlike with trades on the StartEngine Bulletin Board (“SE BB”), trades on SE Secondary are executed the moment that they are matched.

StartEngine Bulletin Board ("SE BB") is a bulletin board platform on which users can indicate to each other their interest to buy or sell shares of private companies that previously executed Reg CF or Reg A offerings not necessarily through SE Primary. As a bulletin board platform, SE BB provides a venue for investors to access information about such private company offerings and connect with potential sellers. All investment opportunities on SE BB are based on indicated interest from sellers and will need to be confirmed. Even if parties express mutual interest to enter into a trade on SE BB, a trade will not immediately result because execution is subject to additional contingencies, including among others, effecting of the transfer of the shares from the potential seller to the potential buyer by the issuer and/or transfer agent. SE BB is distinct and separate from SE Secondary. SE Secondary facilitates the trading of securities by matching orders between buyers and sellers and facilitating executions of trades on the platform. By contrast, under SE BB, SE Primary assists with the facilitation of a potential resulting trade off platform including, by among other things, approaching the issuer and other necessary parties in relation to the potential transaction. The term “Extended”, when used in relation to transactions on SE Marketplace denotes that these transactions are conducted via SE BB, and that these transactions may involve longer processing times compared to SE Secondary for the above-stated reasons.

Even if a security is qualified to be displayed on SE Marketplace, there is no guarantee an active trading market for the securities will ever develop, or if developed, be maintained. You should assume that you may not be able to liquidate your investment for some time or be able to pledge these shares as collateral.

The availability of company information does not indicate that the company has endorsed, supports, or otherwise participates with StartEngine. It also does not constitute an endorsement, solicitation or recommendation by StartEngine. StartEngine does not (1) make any recommendations or otherwise advise on the merits or advisability of a particular investment or transaction, (2) assist in the determination of the fair value of any security or investment, or (3) provide legal, tax, or transactional advisory services.