😮 I bought equity at an 88% discount!

I just got a GREAT deal.

And no, I’m not talking about a pair of Costco khakis. I was able to scoop up 550 shares of a high-quality startup at dumpster-diving prices.

And here’s the thing, there’s plenty of shares left up for grabs at that price. More on this and so much more in today’s edition:

• 🔥 Hot Raises: 5 startups that you can invest in right now

• 🚂 Engine Trouble: StartEngine stock is down 88%, but this could be a great buying opportunity

• ⏬ Free Equity: Check your wallet, you may have some free equity

HOT RAISES

Startups that you can invest in with as little as $100 right now:

📽️ Novella AI - The future of video editing (LINK)

☕️ Steeped Coffee - specialty coffee brewed like tea in a single-serve brew bag (LINK)

🍕 PieWine - Canned wine brand that’s designed to perfectly pair with your pizza (LINK)

🚧 The BuildClub - Intelligent material sourcing for contractors (LINK)

🎮 Overplay - Turn any video into a game (LINK)

ENGINE TROUBLE

Call the mechanic, something’s wrong with the engine.

StartEngine is one of the top funding portals in the crowdfunding space. They’re a private company, but through their secondary market investors can buy and sell shares of StartEngine stock.

I don’t know if you’ve ever seen a cliff, but their stock chart looks like it fell off one.

Their last fundraising round sold shares for $25 each, valuing the company at a $1.32B valuation. After the fundraising round closed, StartEngine listed itself on their own secondary market.

The company share price took a dive, plummeting down to around $3. 

At nearly a 90% decline, the current trading price places the funding portal’s valuation slightly below $200M. And while the situation isn’t perfect, StartEngine has a lot going in their favor:

Cash - Loaded. StartEngine is sitting on a $15M war chest.

Revenue - Solid. $20M+ in the past year.

Equity holdings - Discrete. StartEngine takes equity in each deal equal to 2% of the amount raised. That’s roughly $10M on its balance sheet.

Membership program - Reliable. 28,000 members strong.

StartEngine Private - Exciting. The newest addition has quickly become an important rev stream for StartEngine.

So if StartEngine has so much promise, why has the share price gotten hammered? I believe its a combination of 3 things:

1. Revenue Growth: Startup investing across the board slowed in comparison to years prior. StartEngine as a result saw its revenue growth slow considerably

2. Macro Effects: During the ZIRP Era (Zero Interest Rate Policy), every company was raising at a fluffy valuation. It’s a different funding environment, and valuations have come down across the board

3. Uneducated Investors: The bulk of StartEngine stock is in the hands of retail investors. Many of these investors are not educated on the timeframe of private company investments and were expecting a quicker payday. I reckon a lot of these investors are impatient and looking to sell, putting heavy pressure on the share price.

4. Buyer Demand: StartEngine’s Secondary market is still really, really new. There’s work to be done to build up the demand-side of the platform. Because many of the companies listed are smaller startups, there isn’t a dependable supply of demand for shares in these companies (yet).

I already own shares in StartEngine, and I decided that this is a great buying opportunity. I’ve already purchased 550 shares at an average share price of $3.12.

I’ll be looking to add to that position as long as the share price remains in the $3 range.

By the way, I made a 4-minute video on how StartEngine Secondary works. Check it out here if you need a quick crash course.

FREE EQUITY

You get Equity! You Get Equity!

Republic has quietly rolled out Sharedrops - a way for companies to gift equity to their customers and community.

The gifted equity could be tied to a user action - for example a user could receive equity for downloading an app, making a purchase, or referring their friends.

I haven’t seen any startups take advantage of this feature yet, but it could be an interesting growth tactic in the years to come.

Republic has been light on the details, but I know that I’d like some free equity!