A default judgment obtained without a contested trial is now the subject of an application to set it aside. Meanwhile, Michael Jansen has published new statements about the Defendant, including disputed claims concerning his rental history.

On 10 November 2026, technology entrepreneur Michael Jansen distributed an international press release announcing that he had obtained a default judgment against Shane Liddell in the High Court of England and Wales.

The release, distributed through PR Newswire under Jansen’s name, concerns proceedings numbered KB-2026–002990, Michael Jansen and Others v Shane Liddell.

The judgment was entered on 30 September 2026 after Liddell did not file an acknowledgment of service or Defence within the required period.

The judgment was not the result of a contested trial in which both sides presented their evidence.

Liddell disputes the Claimants’ allegations and has filed an urgent application asking the High Court to set aside the judgment and stay enforcement.

The default judgment is being challenged

Liddell’s application relies on CPR 13.2 and/or CPR 13.3 and raises questions about the procedural history of the claim.

According to his witness statement:

- The claim documents were delivered to his current residential address on 21 August 2026.

- The default judgment dated 30 September 2026 continued to identify his former address.

- A notice listing a disposal hearing for 27 October 2026 was also addressed to his former address.

- He states that he did not know about that hearing and did not attend.

- He first received a copy of the default judgment at his current address on 3 November 2026.

Liddell has asked the Court to examine the service records, confirm what occurred at the October hearing, and determine whether the judgment should be set aside.

His application has been sent to the King’s Bench Division, which issued an automated acknowledgment of receipt. That acknowledgment does not confirm that the application has been determined or that enforcement has been stayed.

The default judgment remains effective unless and until the Court makes a further order.

Solicitor’s regulatory status raised in court evidence

Shane Liddell has also drawn the High Court’s attention to a published Solicitors Regulation Authority (SRA) decision concerning Nilofar Firoz Bawla, a solicitor associated with the Claimants’ legal representation.

The SRA decision, dated 30 September 2026 and published on 7 October 2026, imposed interim conditions on Bawla’s practising certificate. These include restrictions relating to approved employment, management of a legal practice and access to client money.

Liddell referred to the decision in his witness statement supporting his application to set aside the default judgment and included a copy of the published SRA record in his supporting documents.

The restrictions are interim regulatory measures. They do not establish dishonesty, misconduct in these proceedings or any defect in the Claimants’ case.

Official source: “Solicitors Regulation Authority — Nilofar Bawla” (https://www.sra.org.uk/consumers/solicitor-check/531735/)

Jansen publishes a press release and Medium article

Jansen’s PR Newswire release describes the judgment as establishing civil liability and states that damages and other remedies remain to be determined.

It also refers to a further disposal hearing expected in early 2027. Liddell says he has not received a court notice confirming that hearing.

The same period has seen the publication of a Medium article by Jansen titled When Online Allegations Cross the Line.

In that article, Jansen discusses efforts to locate Liddell and alleges that he experienced “multiple evictions in the US and the UK.”

Liddell disputes that allegation.

The Medium article does not, in the passage concerning evictions, identify the individual landlords, the dates of the alleged evictions or the court orders said to support the claim.

A landlord reference challenges the portrayal of Liddell’s tenancy

The eviction allegation is particularly contentious because Liddell holds a signed reference dated 24 March 2026 from his former landlord, Robert Noble.

In that reference, Noble stated that Liddell had been a tenant since December 2023, had paid rent on time, had generated no complaints and was recommended as a tenant.

In an email exchange dated 28 April 2026, Noble also confirmed that he had written the reference.

These documents provide relevant evidence about Liddell’s tenancy and challenge any suggestion that Noble had given only an adverse account of him.

However, the reference does not, by itself, establish how the tenancy ended or resolve allegations concerning other properties.

Liddell disputes Jansen’s account and says the underlying facts should be established through the relevant documents and witnesses.

Earlier US proceedings

The current dispute follows litigation in the United States involving Jansen, Cityzenith and Liddell.

In August 2023, the United States District Court for the Northern District of Illinois dismissed the earlier case for lack of personal jurisdiction.

That dismissal was without prejudice. It did not determine the truth of the parties’ competing allegations.

Liddell says the dispute has had serious financial and personal consequences since 2022, including approximately $20,000 in legal expenses incurred defending the US proceedings.

Those expenses and their legal recoverability have not been determined in the current UK proceedings.

Why the distinction between default judgment and trial matters

A default judgment has legal effect. It cannot be dismissed as meaningless merely because the Defendant did not participate in a contested hearing.

However, it is also important that readers understand how the judgment arose.

In this case, the High Court entered judgment without a full trial of the disputed evidence. The Defendant has now asked the Court to reopen the proceedings.

Whether that application succeeds is for the Court to decide.

Liddell maintains that he has substantive grounds to defend the claims, including issues concerning limitation, the meaning and context of publications, and the Claimants’ allegations of financial harm.

Those matters remain disputed.

“As a committed advocate for investor protection and transparency, I welcome the opportunity to present my evidence before the High Court. I remain confident that the facts deserve to be examined through a fair and open legal process.”
- Shane Liddell

Earlier publicity raises further questions

The November 2026 publicity is not the first time serious allegations about Shane Liddell have appeared in a distributed press release.

On 27 October 2023, PR Fire published a release concerning the earlier US litigation. It alleged fraudulent business conduct, attempts to evade court service, rent fraud and eviction.

The release appeared more than two months after the US District Court for the Northern District of Illinois dismissed the proceedings for lack of personal jurisdiction on 15 August 2023. That dismissal did not determine the underlying allegations.

The release did not explain the dismissal. The identity of the party who commissioned or authorised the publication has not yet been independently verified.

Liddell disputes the allegations and believes the history of these public statements deserves independent scrutiny, particularly in light of the further allegations published in November 2026.

The need for an opportunity to be heard

Liddell has expressed concern that the judgment is being publicized while his application to challenge it awaits determination.

He has also raised concerns about the effect of the publicity on his professional reputation and business activities.

The Court has not yet granted the relief he seeks. That does not mean it has rejected his application.

The immediate questions are whether the default judgment should remain in place, whether enforcement should be stayed, and what opportunity Liddell should have to present his Defence.

The public should understand that the current judgment is under challenge and that the disputed factual allegations have not been tested in a contested trial.

CF Watchdog will report further verified developments, including any decision on the application to set aside the judgment.

Source documents

- High Court of Justice, King’s Bench Division, claim KB-2026–002990, default judgment dated 30 September 2026.

- Defendant’s N244 application and supporting witness statement, submitted November 2026.

- Michael Jansen, PR Newswire press release, 10 November 2026: https://www.prnewswire.com/news-releases/technology-entrepreneur-michael-jansen-secures-uk-high-court-default-judgment-after-four-year-online-defamation-campaign-302934167.html

- Michael Jansen, When Online Allegations Cross the Line, Medium: https://medium.com/@michaeljansen1969/when-online-allegations-cross-the-line-741cafab803c

- Robert Noble, signed tenant reference dated 24 March 2026 and confirmation email dated 28 April 2026.

- US District Court for the Northern District of Illinois, case 1:22-cv-05101, Opinion and Order dated 15 August 2023.

Editorial note: This article reports an ongoing legal dispute. Allegations made by either party are identified as allegations unless supported by an established court finding. The Defendant’s application to set aside the judgment remains pending.

Want to crack StartEngine’s marketing code?

Most founders think StartEngine will promote their campaign for them.
Spoiler: they won’t unless you hit specific hidden milestones.

Over the past few months, we’ve studied how campaigns actually get featured on StartEngine, and what triggers homepage exposure, Venture Club emails, and investor blasts.

We’ve put it all into a short, no-fluff guide called:

StartEngine Secrets: The Founder’s Guide to Unlocking Marketing Promotions

It’s a founder-to-founder playbook on how to:
✅ Hit key milestones that unlock platform visibility
✅ Build early traction that attracts investors
✅ Turn momentum into sustained funding success

To celebrate the release, we’re giving away 10 FREE copies to the community here on Medium.

To qualify, head over to this Linkedin post for more information:

https://www.linkedin.com/posts/smart-crowdfunding_equitycrowdfunding-startengine-capitalraising-activity-7384212556783067136-SLsh

Whether you’re running a Reg CF, Reg A+, or Reg D, this guide helps you understand what really drives visibility on StartEngine.

Let’s help more founders raise capital the smart way.

Crowdfunding & Private Markets
Over the past few months, we’re seeing signals that the landscape of startup capital formation is continuing to evolve, and that crowdfunding and private-market innovations are playing increasingly central roles. Here’s what’s catching our eye at the moment, and what we believe founders, platforms, and investors should watch closely.

Key Developments
Private share trading platforms get formal backing as The London Stock Exchange’s new “Pisces” private-share trading system just secured regulatory approval, and it’s partnering with Crowdcube to bring retail investors into what has traditionally been closed private markets.

Tokenization of equity gains traction as Republic recently announced plans to tokenize equity in Animoca Brands, bringing blockchain / Web3 tooling further into mainstream equity crowdfunding workflows.

Tokenization can offer fractional ownership, automated compliance and (potentially) more accessible liquidity, although regulatory, custody, and governance issues remain real hurdles.

Campaigns breaking out in new sectors as Death & Co, a hospitality / craft cocktail brand, is raising via equity crowdfunding while turning customers into stakeholders and reimagining hospitality capital models.

Fanbase, a social media startup, has surpassed $12.7M in equity crowdfunding funding to date, as it continues to scale its community-ownership thesis.

DropWorks Rum Distillery, a UK rum distillery, recently exceeded its crowdfunding target, raising nearly half a million pounds.

Cartel Roasting Co. is bypassing typical private equity and asking its customer base to invest via StartEngine.

Meanwhile, CB Insights reports that venture activity is heating back up, and Q3 2025 appears to be a turning point.

Things to Watch
Liquidity & exit pathways matter more than ever. As private share trading matures, platforms that can integrate primary fundraising with secondary liquidity will gain advantage.

Regulation & compliance still dominate risk. Tokenization is seductive as a narrative, but real-world frameworks (custody, securities laws, investor protections) will decide winners.

Brand-led / community-driven models are gaining legitimacy. We’re seeing more consumer brands and hospitality names crowdfund — turning customers into co-investors (and evangelists).

Signal quality over volume. With failures declining, the market is maturing. Sophisticated investors will dig deeper into unit economics, traction, and governance frameworks.

It appears that we’re in the middle of an inflection where private markets, blockchain, and crowdfunding models are converging. The organizations that can combine strong capital structures with new forms of access and liquidity will define the next wave of innovation.

Between January and March 2024, Facebook, under its parent company Meta, reported the removal of 631 million fake accounts from its platform. This staggering figure represents a significant portion of the platform’s user base and raises critical questions about the authenticity of the data Facebook has presented to the public, shareholders, and advertisers over the years.

The Extent of the Problem
Facebook’s battle with fake accounts is not new. Over the past years, the platform has consistently reported the removal of hundreds of millions of fake accounts each quarter. For instance, in the last quarter of 2023, the company took action against 690 million fake accounts. These numbers underscore the ongoing challenge Facebook faces in maintaining the integrity of its user base.

Fake accounts can be created for various malicious purposes, including spreading misinformation, conducting scams, and manipulating public opinion. The persistence and scale of these fake accounts indicate sophisticated and widespread efforts to exploit the platform’s reach.

Impact on Advertisers
One of the most significant impacts of the prevalence of fake accounts is on advertisers. Companies invest heavily in Facebook advertising, expecting to reach real, potential customers. However, the presence of fake accounts inflates user metrics, leading advertisers to potentially overestimate the reach and effectiveness of their campaigns. This scenario not only undermines advertisers’ trust in the platform but could also be considered a form of fraud if these advertisers are paying for interactions and impressions that are not genuinely valuable.

Advertisers rely on accurate data to make informed decisions about their marketing strategies. If a substantial portion of the reported user base consists of fake accounts, it skews the performance metrics and insights that businesses depend on. This discrepancy can lead to misallocated marketing budgets and less effective advertising strategies.

Shareholder Concerns
For shareholders, the revelation of such high numbers of fake accounts can be alarming. It raises concerns about the accuracy of the user data that Facebook has historically reported. User growth and engagement metrics are critical factors that influence investor confidence and stock prices. If these metrics are inflated by the presence of fake accounts, it calls into question the company’s valuation and its future growth prospects.

In the financial realm, transparency and accuracy are paramount. Companies that fail to provide a truthful representation of their operations risk losing investor trust. For a company like Facebook, which has faced numerous controversies over the years, maintaining credibility with shareholders is crucial.

Public Trust and Regulatory Scrutiny
The general public also has a stake in the authenticity of social media platforms. Trust in Facebook has been eroded by various scandals, including data privacy issues and the spread of misinformation. The high number of fake accounts further damages this trust, suggesting that the platform is more vulnerable to exploitation than users might have believed.

Regulators are increasingly scrutinizing social media companies for their role in protecting user data and preventing abuse of their platforms. The scale of fake accounts on Facebook could prompt more rigorous regulatory actions and demands for greater transparency in how the company detects and removes these accounts.

Facebook’s Response
Facebook has invested heavily in machine learning and artificial intelligence to detect and remove fake accounts. The company claims that a significant majority of fake accounts are removed before they can engage with other users. Despite these efforts, the sheer number of fake accounts that slip through the cracks indicates that the challenge is far from being resolved.

To address these issues, Facebook has been publishing transparency reports that detail the number of fake accounts removed and the steps taken to combat them. These reports are part of the company’s efforts to rebuild trust with users, advertisers, and shareholders. However, the effectiveness of these measures is still under scrutiny.

Moving Forward
For Facebook to restore and maintain trust, it must continue to improve its detection and removal processes for fake accounts. This effort includes not only technological advancements but also stronger policies and possibly more stringent verification processes for new accounts. Additionally, being transparent about the challenges and the measures taken to address them can help rebuild confidence among all stakeholders.

For advertisers, it’s crucial to stay informed about the ongoing efforts to ensure the authenticity of the platform’s user base. They should demand transparency from Facebook regarding the composition of the audience their ads are reaching. Moreover, diversifying advertising strategies to include multiple platforms can mitigate the risk associated with potential discrepancies on any single platform.

Let’s Wrap It Up…
The removal of 631 million fake accounts from Facebook in just three months highlights a significant issue that has far-reaching implications for the platform’s integrity. This ongoing challenge affects not only Facebook’s reputation but also the trust of advertisers, shareholders, and users. By continuing to enhance its detection methods and being transparent about its efforts, Facebook can work towards regaining the trust and credibility it needs to sustain its position as a leading social media platform.

[London] – July 09, 2024 –

XseedR is excited to announce the upcoming launch of its new global crowdfunding industry media platform scheduled to launch on July 25th, 2024.

This innovative platform is dedicated to providing the latest in crowdfunding news, actionable tips, insights, and interviews, while also uncovering and exposing suspected scam campaigns within the crowdfunding space. By delivering accurate and transparent information, Crowdfund Watchdog aims to ensure a safer investment environment for all participants in the crowdfunding industry.

Empowering Issuers and Investors

At Crowdfund Watchdog, our mission is to empower issuers and investors by rigorously investigating reports from the public and meticulously examining each case to identify any fraudulent activities. By shining a light on these deceptive practices, we aim to foster trust and accountability within the crowdfunding industry, protecting both investors and legitimate campaign creators.

“We believe that integrity and vigilance are paramount in maintaining a healthy crowdfunding ecosystem,” said Shane Liddell, spokesperson for Crowdfund Watchdog. “Our platform is designed to safeguard investors from scams while supporting genuine projects that deserve to succeed. By providing a reliable resource for identifying and exposing fraudulent campaigns, we hope to make crowdfunding a more secure and trustworthy method of raising capital.”

Website Features and Offerings

Crowdfund Watchdog’s new website will offer a comprehensive range of features designed to inform and protect the crowdfunding community:

1. Comprehensive Investigations:

Our team of experts will conduct examinations of reported campaigns to identify and expose fraudulent activities. Each investigation is documented to ensure transparency and accuracy.

2. Crowdfunding News:

Stay updated with the very latest news in the crowdfunding industry. Our news section will cover important developments, regulatory changes, and emerging trends that impact both issuers and investors.

3. Actionable Tips and Insights:

Gain valuable tips and insights on how to navigate the crowdfunding landscape. Our expert advice will help issuers create successful campaigns and investors make informed decisions.

4. Interviews and Stories:

Learn from the experiences of successful campaign creators and industry experts through exclusive interviews and stories. These firsthand accounts provide practical knowledge and inspiration.

5. Community Engagement:

We encourage public participation in reporting suspected scams and fostering a collaborative effort to maintain industry integrity. By working together, we can create a safer crowdfunding environment.

6. Educational Resources:

Access a wealth of educational materials designed to enhance your understanding of crowdfunding. Our resources include guides, tutorials, and FAQs to help you stay informed and make better decisions.

Join the Movement for Safer Crowdfunding

Crowdfund Watchdog invites the public to join this important initiative by submitting reports of suspected scam campaigns. Each report will be thoroughly investigated by our team of experts, ensuring that no fraudulent activity goes unnoticed. Through our collaborative efforts, we aim to create a safer environment for crowdfunding and help legitimate projects thrive.

“We are committed to enhancing transparency, security, and trust within the crowdfunding industry,” added Shane Liddell.

“Our platform is not just about exposing scams; it’s about empowering the entire crowdfunding community with the knowledge and tools they need to succeed.”

Mark Your Calendars!

The new Crowdfund Watchdog website will officially launch on July 25th, 2024. Be sure to visit Crowdfunding Watchdog website (https://cfwatchdog.com/) to sign up and join us in our mission to make crowdfunding a safer and more reliable way of raising capital.

About Crowdfund Watchdog

Owned and operated by XseedR Limited, Crowdfund Watchdog is dedicated to uncovering and exposing suspected scam campaigns within the crowdfunding space. Our mission is to empower issuers and investors by providing accurate and transparent information, ensuring a safer investment environment for all. We investigate reports, rigorously examining each case to identify any fraudulent activities. Through our platform, we aim to foster trust and accountability within the crowdfunding industry, protecting both investors and legitimate campaign creators. Join us in our commitment to integrity and vigilance, and help us make crowdfunding a safer and more reliable method of raising capital.

For more information, please visit https://cfwatchdog.com/ or email Michelle Walker at info@cfwatchdog.com.

Contact:
Media Contact: Michelle Walker
Administrator
Crowdfund Watchdog

Email: michelle@cfwatchdog.com
cfwatchdog.com

Let’s talk about a major shake-up in the crowdfunding world back in 2022. One which you may have heard little about as these things tend to be brushed under the carpet in the hope that nobody notices.

Wefunder, one of the biggest names in investment crowdfunding, got slapped with a $1.4 million fine by FINRA. This wasn’t just a slap on the wrist — it was a full-on wake-up call for the industry.

So, what happened?

Between 2016 and 2021, Wefunder was a bit too ambitious. They raised about $20 million more than they were allowed under the crowdfunding limits. How did they manage that? They shuffled the extra cash from their crowdfunding campaigns into other offerings that fell under different regulatory exemptions​ (FINRA)​​​.

But that’s not all. FINRA found that Wefunder wasn’t following the rules when it came to handling investor funds. They were slow to direct funds to issuers or return them to investors. Plus, they sent out mass emails to potential investors, pushing investments listed on their portal. That’s a big no-no in this space​​​​.

The communications on Wefunder’s site also didn’t meet the mark. There were misleading statements that didn’t paint the full picture of the investments. And internally, their supervisory systems were lacking. An internal email from 2021 even had one officer calling out another for not delegating tasks properly — a clear sign that things were off-track​​.

As part of their settlement, Wefunder agreed to bring in an independent consultant. This consultant will help them clean up their act, reviewing and improving their systems and procedures​​​​.

Now, Wefunder wasn’t the only one in hot water. StartEngine Capital, another major player, got hit with a $350,000 fine too. Their issues ranged from misleading communications about their offerings to not properly supervising the content on their site. One standout example was a home robot that was advertised as way more advanced than it actually was. StartEngine knew — or should have known — that these claims were exaggerated but didn’t step in to correct them​​​​.

Jessica Hopper, the EVP and Head of FINRA’s Department of Enforcement, made it clear that these actions are all about protecting investors. Crowdfunding portals have a critical gatekeeping role, and FINRA is watching them closely to ensure they’re playing by the rules​.

The takeaway here? Crowdfunding platforms need to stay transparent and follow the rules to maintain investor trust. These fines are a stark reminder that cutting corners is not an option if you want to stay in the game.

As the industry evolves, compliance and transparency are going to be more important than ever.

This is an opinion piece. My opinion is based on my personal experiences and research into StartEngine, its management, vendors, and shareholders.

First Impressions

Let me rewind back to November 2015…

It was a bitter cold day in Washington DC, and boy, was I feeling it. I’d just flown in from “The Sunshine State” leaving temperatures at around 90°F, and arriving near freezing, with snow falling too. This was my second visit to DC, my first being as a 16-year-old in tow with Mum and Dad many, many moons ago when on vacation.

I had arrived in DC to attend the Crowdfunding Professional Association conference scheduled for the next day.

The following morning during the conference, and after several speakers had come and gone on stage, it was the turn of the StartEngine CEO (at the time), Ron Miller.

With a video ready to roll in the background. Miller then went on to say:

“This video generated 27 million dollars.”

The $27 million Miller referred to, were in fact Expressions of Interest, also known as Reservations during a Test-the- Waters campaign, so no real investments had taken place at the time.

My first impression was not a good one.

I glared at him. He glared back.

And then the video began…

It was a video about Elio Motors, hoping to develop a 3-wheeled car. The $6,800 (now electric and $14,900 according to their website) three-wheeled car is designed principally for commuting and was expecting to get an estimated 84 miles per gallon. Elio were in the throes of raising capital at the time using the REG A+ exemption and had launched a Test-the-Waters campaign on the StartEngine platform. The actual REG A+ raise itself did manage to raise almost $17M.

Today, a whole 10+ years later, Elio still has not brought this car to market, and looking at their website, it appears that it is barely functional. One can’t help but be suspicious of a slow rug-pull going on over these past few years. This article sheds some light on the situation back in 2021: Elio Motors Took Millions in Customer Deposits, Never Delivered Car.

StartEngine’s Valuation Game

StartEngine’s journey from a $120 million valuation in 2019 to a staggering $1.3 billion just a few years later raises several red flags. The company’s management appears to have strategically manipulated its share price, benefiting insiders at the expense of retail investors.

During 2019, StartEngine initially raised funds through the TruCrowd portal at a valuation of $120 million. Over the next 2 years, it conducted seven more crowdfunding campaigns (some on their own platform and the others on TruCrowd), each time increasing the valuation without substantial justification, with one increase going from $786B to $1.3B in several months. By the time they reached a valuation of $1.3 billion, and at a share price of $25,management had sold millions of dollars’ worth of their own shares to largely unsuspecting retail investors.

The increase in share price culminated in a raise at $25 per share, which critics argue was unjustifiable. The previous round’s valuation was a mere $786 million just months earlier, suggesting a drastic and unsupported spike in valuation​​.

Interestingly, only one campaign out of them all managed to reach its funding target, although that raise only targeted a couple of hundred thousand dollars. All others failed, and in some cases, really badly. For example, their REG A offering which closed on Dec 19th, 2021, had a funding goal of $55M and only managed to raise $16,869,155

This was followed up by a REG A raise targeting $75M during 2022 at a valuation of $1.3B, which managed to raise a total of $24.5M by November, 2023. (Crowdfundinsider)

It appears that StartEngine are really not very good at crowdfunding. Probably good at manipulation though, and as we’ve seen, not so good at actually raising $’s for themselves.

Strategic Stock Splits and Market Positioning

Adding to the complexity of StartEngine’s valuation is its strategic decision to implement a 20-for-1 stock split. This maneuver effectively lowered the price per share to $1.25 from $25, making it more accessible to a broader range of investors. This move is typically seen as a strategy to increase liquidity and attract more retail investors, which aligns with StartEngine’s goal of democratizing investment in startups​ (Hubtas)​.

The stock split also signals potential future plans for an Initial Public Offering (IPO). For StartEngine to list on NASDAQ, it would need a minimum bid price of $5 per share. This suggests that the company might aim for a valuation of at least $5.28 billion to meet the listing requirements​ (Hubtas)​.

Regulatory Compliance and Corporate Governance

StartEngine has also made significant changes to its corporate structure and governance to enhance compliance with federal and state laws. These changes were unanimously approved by the Board of Directors and the majority of stockholders, reflecting strong internal support for the company’s strategic direction​ (StartEngine)​.

Despite these efforts, the company’s transparency and management practices remain under scrutiny. Insiders, including employees and senior officers, are prohibited from trading on StartEngine Secondary to avoid conflicts of interest and market manipulation. However, earlier investors still face restrictions, which adds another layer of complexity to the company’s trading practices​ (StartEngine)​.

The Aftermath for Retail Investors

Today, StartEngine’s share price reflects a valuation of around $250 million, a far cry from the inflated $1.3 billion valuation at which insiders sold their shares. This dramatic decrease in value has left retail investors with little to nothing of value. The management’s actions during the period of inflated valuations, where they sold off significant holdings, have resulted in significant financial losses for those who bought in at the higher prices​.

A Closer Look at Financial Performance

StartEngine’s financial performance over the past few years reveals a pattern of aggressive growth strategies coupled with questionable financial health. In 2021, the company reported sales of $29.08 million, a significant increase from $12.57 million in 2020. However, despite this growth in revenue, the company’s operating income and net income remained in negative territory, with losses widening year-over-year​ (markets.businessinsider.com)​.

The balance sheet also shows a substantial increase in total liabilities, rising from $2.32 million in 2020 to $7.29 million in 2021. This increase in debt, coupled with a negative net income, raises concerns about the company’s long-term financial stability and its ability to deliver on its promises to investors​​.

Future Prospects and Investor Sentiment

As StartEngine looks to the future, its path to an IPO remains uncertain. The company’s need to achieve a valuation of at least $5.28 billion to meet NASDAQ listing requirements suggests that an IPO is still years away. Meanwhile, the company’s efforts to increase share liquidity and attract new investors through stock splits and other strategic maneuvers will likely continue​​.

Investor sentiment, however, remains mixed. While some view StartEngine as a pioneer in democratizing investment in startups, others are wary of its aggressive valuation tactics and the significant financial losses incurred by retail investors. The company’s ability to rebuild trust and demonstrate sustainable growth will be crucial in determining its long-term success​​.

Conclusion: Pioneers or Con Artists?

StartEngine’s rise in the equity crowdfunding space is marked by significant achievements and equally significant controversies. The dramatic increase in valuation, strategic stock splits, and regulatory maneuvers suggest a company adept at navigating the financial landscape to its advantage. However, the lack of substantial justification for valuation increases and the potential exploitation of retail investors cast a shadow over its practices.

As StartEngine moves closer to its goal of going public, it will need to address these concerns to maintain investor confidence and truly democratize investment opportunities. Whether viewed as pioneers or con artists, StartEngine’s story is a compelling case study in the complexities and potential pitfalls of equity crowdfunding.

Looking Ahead: Lessons for the Future

As we move into mainstream equity crowdfunding, there are important lessons to learn from the mistakes of others. Firstly, the customer is still king and even more so when they are the ones feeding your very existence. Ignoring their voices is a common sight, even among the new breed of equity portals and platforms. Campaign creators and issuers with ideas will always be around in huge numbers attempting to pitch their wares. However, the backers and investors won’t unless you treat them with fairness and listen to their voices.

While others make critical mistakes, and in some cases crumble into oblivion, upcoming platforms and portals must always look out for the real customers — the project creators and issuers who bring their ideas, and more importantly, the investors who bring the real money to the table.

Look out for my next article “Wefunder — The $1,400,000 Penalty!” which I plan to publish shortly.

About the author…

Shane Liddell is Chief Crowdfundologist at Smart Crowdfunding, a Crowdfunding Marketing and Consulting Agency operating in the United States for over 11 years. Shane also serves as Managing Director of new UK Startup, XseedR. Shane is an industry veteran, a crowdfunding expert & startup advisor, helping entrepreneurs raise the capital they need.