Netcapital announced recently that is pursuing a broker-dealer license in order to increase potential revenue generation.
The company intends to expand service offerings to include Reg A+ and Reg D deals and broker-dealer partnerships.
Netcapital Inc. (Nasdaq: NCPL, NCPLW), a digital private capital markets ecosystem, announced that its wholly-owned subsidiary, Netcapital Securities Inc., has applied for broker-dealer registration with the Financial Industry Regulatory Authority (FINRA).
This is said to mark a significant step in the company’s evolution as it looks “to expand upon its current service offerings and support private companies with larger and later stage financings than are currently permitted under Regulation Crowdfunding (Reg CF).”
Netcapital believes that by having a registered broker-dealer, it will be able to effectively create opportunities in order to expand its revenue base by:
- Hosting and generating additional fees from Reg A+ and Reg D offerings on the Netcapital platform. Under Reg A+, companies can raise up to $75 million from accredited and non-accredited investors every 12 months (versus $5 million permitted under Reg CF). Additionally, under Reg D 506(c), companies can raise unlimited amounts of capital from accredited investors using general solicitation.
- Earning additional fees in connection with offerings that may result from the introduction of clients to other FINRA broker-dealers.
- Expanding Netcapital’s distribution capabilities by leveraging strategic partnerships with other broker-dealers to distribute offerings of issuers that utilize the Netcapital platform to a wider range of investors in order to maximize market penetration and optimize capital-raising efforts.
Martin Kay, CEO of Netcapital Inc., said:
“We believe that this represents a significant step for Netcapital. We continue to seek to build out our service offerings for investors seeking opportunities and for companies aiming to raise capital, while expanding our ecosystem and addressable market. This is an important component of our growth strategy, and furthers the value proposition for our shareholders.”
Netcapital Securities Inc.’s application to “become a registered broker-dealer remains subject to regulatory approval and/or licensing from the Financial Regulatory Authority (FINRA) and the Securities and Exchange Commission (SEC).”
No assurance can be given as to when or if such approvals “may be granted or when, if at all, Netcapital will be able to expand the services it offers.”
As covered, Netcapital Inc. is a fintech company “with a scalable technology platform that allows private companies to raise capital online and provides private equity investment opportunities to investors.”
The company’s consulting group, Netcapital Advisors, “provides marketing and strategic advice and takes equity positions in select companies.”
The company’s funding portal, Netcapital Funding Portal, Inc. is registered “with the U.S. Securities & Exchange Commission (SEC) and is a member of the Financial Industry Regulatory Authority (FINRA), a registered national securities association.”
