Normally, only accredited investors — in other words, investors with a high net worth and expanded financial access — are given opportunities to invest large sums of money with private companies.
Given the slowdown in initial public offerings in the stock market, Frishman founded Netcapital to offer average investors both a solution for, and more awareness about, investing in private names.
“How do I create returns when all market value is being created in the private markets before the IPO? The era of the small company IPO is dead,” the CEO said. “Netcapital solves that problem, and there are really two things that we have to do. No. 1 is we have to generate access — we have to allow you to get access to these hot new deals or exciting, innovative ideas that entrepreneurs have. And then No. 2 is we have to lower that minimum investment down so you can invest $99.”
With an average amount of $150,000 raised per company, Netcapital is still in its early stages. Frishman said a typical market capitalization for its clients is between $2 million and $10 million.
But Frishman is just getting started, and Netcapital investors already fall in a wide range of demographics, from college students to older retired individuals.
“Not only is Netcapital a solution to help entrepreneurs raise capital, but it’s also a solution for anybody get involved in investing in this early-stage asset class,” the CEO said.
And while Netcapital is not yet looking forward to its own IPO, the company’s disruptive quality seems to suggest it has much more room to run.
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