"We did not have any of them become the next Uber or something massive," Howard Marks said of the thousand-plus companies that have raised money on his platform. "Some companies did well, many did nothing. Some are still running, still building."
Marks, chief executive of StartEngine, said on the On The Margin podcast that his first fund put about $20,000 each into 59 startups and that he never solved the picking problem. "We didn't have the right process," he said. "it's an odds business." Backing companies that early, he added, is "a high risk investment when you go early."
Regulation Crowdfunding turned ten in May 2026. Securities and Exchange Commission economists counted 8,492 offerings launched by 7,134 issuers between the rules taking effect in May 2016 and the end of 2024. Only 3,869 of them reported any proceeds. Together those raised about $1.3 billion. The median company doing it had three employees, $80,000 in assets and $10,000 in revenue. One issuer in seven had ever turned a profit.
This is not the Howard Marks whose investor memos circulate on Wall Street, the Oaktree Capital co-chairman. This one bought into a nearly bankrupt games company with Bobby Kotick around 1990, restructured it into the modern Activision, chaired its studio arm through the 1990s and left before Call of Duty existed. He later bought the remains of Acclaim Entertainment at a bankruptcy auction for $100,000 because nobody else showed up to bid in August. He started StartEngine in Los Angeles in 2011 as an accelerator, then pivoted when the crowdfunding rules arrived.
His pitch then was that capital was rationed by pedigree. Venture money, he pointed out, is not the venture capitalist's money. "Don't forget when you raise money from a VC, it's not" their own, he said. "the pension funds represent the ordinary worker. And so we said just go direct." Getting funded by his own accelerator, he added, was "harder than getting into Stanford or Harvard."
The business quietly moved upmarket
The going-direct business is no longer what StartEngine runs on. Since 2023 the company has sold accredited investors membership interests in pooled vehicles it calls SE Funds, which hold shares of late-stage private companies. That product, StartEngine Private, brought in $20,492,314 of the company's $25,049,691 in first-quarter 2026 revenue, according to StartEngine's quarterly report filed with the SEC. Roughly 82 cents of every dollar now comes from selling wealthy investors a slice of companies that are already big.
Marks described the shift as a natural extension. "What if we offered access to more mature companies that are private, that have very good potential?" he said. The new division was "for wealthier investors, we call them accredited, and they can invest in our funds, and that's been a very big success for us."
Revenue fell year over year, from $30.4 million in the same quarter of 2025. The company swung from $1.7 million of net income to a $2.2 million net loss attributable to stockholders. It held $14.1 million of private-company positions at the end of March, more than $11 million of it in AI software, alongside smaller stakes in robotics, rare earth materials, defense technology and prediction markets. In March it bought Vinovest, a wine and whisky investing platform, for $14 million in stock.
What the subscription agreements say
The mechanics are set out in StartEngine's own paperwork. The filing explains that the company "purchases the private company shares either directly or through other special purpose vehicles and after a certain period of time sells its investment to an SE Fund." Investors buy into the fund. The fund buys from the affiliate. The affiliate keeps the difference.
That difference is disclosed, series by series, and it is large. The subscription agreement for the series holding SambaNova shares states that the fund "intends to purchase the Portfolio Company Securities from its affiliate at a price that is approximately 194.12% greater from the price (including transaction fees) such company bought the Portfolio Company Securities." The ConsenSys series discloses a markup of "approximately 61.81%." The PsiQuantum series discloses "approximately 39.80%." The Perplexity series discloses "approximately 67% greater on the first purchase and approximately 59% greater on the second purchase."
Each agreement carries the same warning about what the buyer is getting. "the Company has not independently done due diligence on the Portfolio Company or the Portfolio Company Securities," the documents read. "It is the responsibility of the Subscriber to perform their own due diligence." The company also makes no claim about what the shares are worth: "No representation is made by the Company about the value of the Portfolio Company Securities."
Investors also do not get what most people picture when they hear they own a piece of SpaceX or Perplexity. The agreements state that the portfolio company "is not a party to the transactions contemplated in this Subscription Agreement, has not necessarily been informed of such transactions, may not approve of them, and may take actions to attempt to invalidate or frustrate them." The subscriber, the documents add, "shall have no rights of a shareholder."
That gap between exposure and ownership is the thing the tokenization industry has spent years arguing about. Chris Turner, co-founder of Kula, said on the On The Margin podcast that most such structures are "giving a contractual exposure to the economic upside of that particular asset. But you don't own the asset."
The rest of the market charges single digits
Markups are not unique to StartEngine, and a firm that buys shares with its own money and holds them is taking real risk while it waits. But the scale is unusual. Forge Global, the listed marketplace where institutions trade private shares, reported keeping between 2.3% and 2.8% of trading volume as revenue through 2025. That is the venue's cut of each trade. StartEngine's disclosed affiliate markups run from about 40% to nearly triple.
Buyers pay up for private companies almost anywhere they are packaged. Destiny Tech100, a closed-end fund that trades on the NYSE and requires no accreditation at all, told investors in a prospectus supplement that its shares closed at $61.66 on May 21, against a net asset value of $24.56 per share on March 31. Its largest positions are vehicles holding economic exposure to Anthropic, SpaceX and OpenAI.
Demand has a policy tailwind behind it. An August 2025 executive order directed regulators to open 401(k) plans to private equity, private credit and other alternatives, and to reconsider who counts as an accredited investor. The Labor Department published a proposed rule on March 30, 2026 creating a fiduciary safe harbor for plan sponsors who add those assets, with comments closing on June 1. If it is finalized, the pipe that carries ordinary paychecks into private markets gets considerably wider.
Chan Ahn, founder of Tessera, said on the On The Margin podcast that the appeal is real. His company launched tokenized SpaceX exposure in February. "the private market is where real alpha really lives," he said. "But it was always gate kept to top 0.1 % through paperwork, minimum tickets and geography."
A fund with his name on it
StartEngine now sells a vehicle called the Howard Marks A.I. Fund. It is offered under Regulation D to accredited investors only, at a minimum investment of $15,056 and $121.42 per security, with 20% carried interest. The eight companies in it are Attentive, Outreach, H2O.ai, Harness, SingleStore, ThoughtSpot, Recogni and PsiQuantum. The page discloses the arrangement plainly: "The amount paid by the series of the StartEngine Private Funds is higher than the price the affiliate purchased the securities previously in the secondary market."
On the podcast, Marks name-checked the two firms retail buyers actually want. "the guys who joined Facebook at the beginning or Anthropic recently are gonna be extremely successful," he said. Neither Anthropic nor OpenAI is in the fund that carries his name, and neither is the private space company whose shares draw the most retail interest of all.
The company has been told before to be careful about what it tells investors. FINRA censured StartEngine Capital and fined it $350,000 in May 2022, finding that between November 2016 and January 2018 the portal had posted issuer communications it knew or should have known were misleading and published inaccurate counts of how many investors were in offerings. The firm settled without admitting or denying the findings.
None of this is hidden. It sits in the filings, the fund pages and the subscription agreements, which is where the wealthy investors now buying in would have to go looking. The decade behind them is already counted: a median issuer with three employees, one in seven ever profitable.
He was asked whether he felt lucky. "Yeah, I think luck is important," he said.
He was asked what separates the founders who make it from the ones who stop.
"when you quit the success rate becomes zero percent," he said.