KingsCrowd, the independent ratings and analytics service for the newly emerging online private securities markets, announced the completion of a capital raise on the Netcapital funding portal, totaling $1,000,000.80.
Boston-based Netcapital is a private securities platform that connects investors and entrepreneurs to help private companies grow.
“These newly emerging online private markets are now transacting $4 billion to $6 billion yearly and growing rapidly,” said Chris Lustrino, CEO of San Francisco-based KingsCrowd. “With the opportunity to invest like a venture capitalist, individuals and institutions are looking to pour dollars into earlier stage companies since so much growth now occurs before companies ever go public.”
Prior to a provision of the JOBS Act that went into effect in 2016, opportunities to invest in private companies was restricted to accredited (high net worth) investors and largely controlled by venture capitalists and private equity firms. In the interest of spurring more investment capital for start-up firms to create jobs, Congress opened the field up to all investors, within certain limits, under Regulation Crowdfunding (Reg CF) and Regulation A+.
Under the regulations, private companies offer their securities online via an “investment portal,” such as Netcapital, which enables investors to set up an online account, browse listed companies, and invest. Accredited investors also can also invest larger sums in such deals under Rule 506 (c) under Regulation D.
KingsCrowd raised the capital in a “side-by-side” offering, raising $902,952 under Reg CF and $97,048.80 under Reg 506 (c).
“Now that private market investment opportunities are available to all investors, it’s important that these investors have tools available to them to help evaluate these companies. KingsCrowd plays an important role in providing those tools,” said Jason Frishman, founder and CEO of Netcapital. Investment portals do not make investment recommendations.
KingsCrowd is working to build a comprehensive database of private companies rated across key metrics, including market size, founder experience, business model, product or service differentiators and terms of the deal. These metrics are augmented by financial and operating data required to be filed by the SEC.
KingsCrowd is looking to service both individual investors and investment professionals such as registered investment advisors, family offices and wealth advisors.
To date more than $1 billion has been invested in more than 1,000 deals under Regs CF and A+, Lustrino noted. Yet unlike investors in the public markets, who have access to numerous investment decision resources, “the tools for education, research, ratings and analytics that exist in the public arena haven’t existed in the newly accessible online private markets. KingsCrowd serves to fill that void.”