After StartEngine’s Reg A+ campaign closed in October 2020 (where they raised $18.9 million!), StartEngine announced that investors could now buy into the StartEngine Owner’s Bonus program for a fee of $275 per year.
Today, we will discuss what the StartEngine Owner’s Bonus program is, what the benefits are, and if it’s worth the $275 annual fee.
What is the StartEngine Owner’s Bonus?
As the name implies, the StartEngine Owner’s Bonus is a program that was first started for investors in the StartEngine Reg A+ campaign where qualifying investors (i.e. those who invested at least $1,000) would be eligible to receive 10% bonus shares on all participating investments made on the StartEngine platform.
Essentially, this means that if you would have purchased 10 shares for $100 at $10/each, you would instead receive an extra share ($110 total in value) each time you invested in a company on StartEngine.
While the program was only available to investors in the StartEngine Reg A+ campaign, StartEngine has now made it available for investors to purchase for an annual fee.
How Much Does it Cost?
In October 2020, StartEngine announced that the 10% Owner’s Bonus benefits could now be purchased for an annual fee of $275. Thus, while the Owner’s Bonus benefits were previously restricted to those who invested over $1,000 in StartEngine’s own Reg A+ campaign, they now made the benefits of the program available to any investors who wanted to participate.
What are the perks of the StartEngine Owner’s Bonus?
The three primary benefits of the StartEngine Owner’s Bonus program are:
- Earn 10% bonus shares on each participating investment
- Priority waitlist for oversubscribed companies
- Email notifications on all new campaign launches
The most valuable benefit in our opinion is the first perk, which earns investors an additional 10% bonus shares for each participating investment. However, some investors may find the priority waitlist benefit also helpful.
Which companies qualify for the Owner’s Bonus?
StartEngine says that the Owner’s Bonus program is offered to both Reg CF and Reg A+ companies on their platform. Each company must choose whether or not they will participate.
You will see a badge that says “This Offering is eligible for the StartEngine Owner’s 10% Bonus” on the top of the campaign page for any deal that offers the bonus.
Is the StartEngine’s Owner’s Bonus worth the $275 annual cost?
The easiest way to determine whether the Owner’s Bonus is worth the $275 annual cost is to use the following calculation:
$275 / 10% = $2,750 total investments per year to be worth it
What this says is that if you invest at least $2,750 per year on StartEngine, the Owner’s Bonus will essentially pay for itself.
This is because at $2,750 of qualifying investments, you will receive $275 in bonus shares (it will round for whole share counts, so it may be a little less). Thus, the $275 fee will have been 100% covered at that point, and any other investments you make are extra shares that you’ll get for free.
For example, if you invested $5,000 a year, that’s $500 in bonus shares – and you’ve made a decent ROI on your $275 fee for the Owner’s Bonus program (obviously it is all still worthless until and if any company has an exit).
If you also place value on the other two benefits, then the break-even point may even be less than $2,750 in investments per year. For example, perhaps getting in on the hottest deal of the year was most important to you; in that case, the waitlist priority perk may be worth more than the $275 fee to you just to gain access to that deal.
Other Considerations and Limitations
While the StartEngine Owner’s Bonus is a no-brainer for anyone who is investing at least $2,750 per year on StartEngine, there are a few additional limitations to take into consideration.
- Bonus shares are rounded. Right now, StartEngine is not issuing fractional shares. This means that your shares may be rounded down to the nearest whole share, netting you a little less than the exact 10% bonus.
- Only on participating deals. While most of the campaigns today on StartEngine do participate, it is at the discretion of the issuer whether or not to take part in the Owner’s Bonus. Thus, there may be several deals you try to invest in where you won’t get the 10% bonus shares. While StartEngine says it is being offered to both Reg CF and Reg A+ companies, I have noticed that many of the Reg A+ companies today chose not to participate.
- There are other ways of receiving bonus shares. The Owner’s Bonus is one way of receiving 10% bonus shares, and this benefit lasts throughout the duration of any participating campaign. However, it is also possible to receive 20%+ bonus shares due to early-bird bonus offers (e.g. investing in the first 72 hours) on certain campaigns. In this instance, you will not receive an additional 10% bonus shares for your Owner’s Bonus on top of the early-bird bonus.
- Bonus shares are still worthless until an exit. Free shares in excess of the $275 fee seem like a great deal, and they are – as long as you would have been making those investments regardless. Remember that you are getting “free” bonus shares in early-stage companies, which on an individual investment level are very illiquid and statistically speaking will probably end up worthless (though as a well-diversified portfolio, may outperform the public markets). Bonus shares should be used as part of an overall startup investment portfolio approach where you practice good diversification and don’t let it trick you into investing more than you would have been investing without it.
- There are often promotions for renewing your Owner’s Bonus. As a StartEngine Owner’s Bonus customer myself (I qualified because I invested $1,000 in StartEngine’s own Reg A+ campaign previously), I know that every now and then StartEngine will offer you different promotions to extend your Owner’s Bonus for another year. This has been offered in the past for those who make a certain number of qualifying investments on the platform in a certain period of time (e.g. make 2 investments of at least $xxx dollars in the next two weeks to extend your Owner’s Bonus benefits for another year). Thus, there may be other opportunities for Owner’s Bonus program participants to extend their benefits without having to pay the $275 renewal fee.
StartEngine Owner’s Bonus Summary
As discussed, if you are investing more than $2,750 per year on StartEngine’s platform already, paying the $275 fee to receive 10% bonus shares is almost a no-brainer – especially if you are investing considerably more than $2,750 per year.
Other investors may find its priority waitlist benefits to be of value. We will revisit this next year to see how popular the program was with investors and see if StartEngine decides to introduce any other benefits.