Netcapital is a private securities platform that makes the capital markets work for real people. We connect investors to entrepreneurs to help private companies grow. Netcapital allows companies to raise capital by selling common stock or membership units to investors for cash. Netcapital empowers companies to raise capital by offering investment opportunities to the general public, including your friends, family, customers, vendors, suppliers, angel investors etc.
Netcapital is a Funding Portal registered with the U.S. Securities and Exchange Commission (SEC) and member of the Financial Industry Regulatory Authority (FINRA), a registered national securities association, as required by SEC rules.
What is Crowdfunding, and how is that different from Netcapital?
Crowdfunding generally refers to capital raising platforms such as Kickstarter or GoFundMe where money is raised through soliciting small individual investments or contributions from a large number of people. Crowdfunding websites in the United States have been a popular way to solicit charitable donations and to raise funds for various initiatives like films, consumer products, and music recordings in exchange for rewards such as T-shirts or early access to a new product.
Netcapital allows you to buy equity in companies, as opposed to just receiving T-shirts or other rewards in exchange for a contribution of money. With the change in regulation initiated by the Jumpstart Our Business Start Ups (JOBS) Act (referred to on Netcapital as Section 4(a)(6) and also referred to in other places as Regulation Crowdfunding, Regulation CF or Reg CF) adopted by U.S. Securities and Exchange Commission (SEC) in 2016, the general public now has the opportunity to participate in the early capital raising activities of startup and early-stage companies and businesses. Companies, like those using Netcapital, can use this new law, Section 4(a)(6), to offer and sell financial securities (equity) to the general public, like you.
What is Section 4(a)(6)?
Section 4(a)(6) under the Securities Act of 1933 (1933 Act) is an exemption to the general requirement that a company must register its securities to be offered and sold with the SEC. Section 4(a)(6) is sometimes referred to as Regulation CF or Title III. This new rule implemented the requirements of the JOBS Act in 2015. Section 4(a)(6) is a mechanism that enables anyone to fund startup companies and small businesses in return for equity. Investors invest money in a business and receive ownership of a small piece of that business.
Section 4(a)(6) allows companies to raise up to $1,070,000 from investors within a 12-month period using funding portals registered with the SEC, like Netcapital.