Nextmarkets Generates Strong Investors
The financial trading startup company has attracted investment from several investors, including DEWB, Cryptology Asset Group, and Alan Howard, in its Series B funding round. Operating from Malta, Cryptology Asset Group invests in blockchain companies such as Northern Data (a high-performance computing company focused on Bitcoin mining) and Iconic Holding (a crypto asset manager business).
In total, the fintech startup company has generated $43 million in funding from investors. The business raised initial funding, a seed round, in 2015.
Malta Grows as a Fintech Hub
Though the startup operates from Germany, Nextmarkets is registered in Malta and regulated by the Malta Financial Services Authority (MFSA). Beyond Nextmarkets, Malta is also home to Ozan (a fintech-focused on payments), EZ365 (a cryptocurrency exchange business), and Quidax (a digital assets exchange company).
A Regulation-Intensive Business
Stock trading is a challenging business for fintech companies. Each country has different regulatory requirements. By successfully registered in multiple countries and earning significant outside investor support, Nextmarkets may pave the road for additional fintech innovation.
How the Business Is Different From Low-Cost Brokers
Over the past twenty years, many companies have offered low or no-cost investment services. Sometimes known as discount brokers, the business model means that typically, there is no advice provided to each investor. An investor interested in professional advice would have to pay higher fees to work with a wealth management or full-service brokerage company.
Nextmarkets has a different approach. The fintech startup provides trading coaches who provide users with multiple analyses per month from a wide range of market analysts. The fintech business has analysts interested in foreign exchange, commodities, day trading, and other areas of expertise.
How the Commission Free Business Model Works
At first glance, offering commission-free trading may not seem like a sound business model. Historically, stock brokerages have earned commissions for each trade they placed. Less than a decade ago, Business Insider reported that brokerages could charge $7 per trade. The rise of companies like Robinhood and Nextmarkets shows that commission-free trading does work as a business model.
The business model relies on earning revenue in other ways. For Robinhood, the company earns revenue by payment for order flow. This unusual model generated an estimated $69 million in revenue for Robinhood in 2018. For Nextmarkets, the company earns revenue from stock exchanges.
About the Author
Bruce Harpham is an author and marketing consultant based in Canada. His first book, "Project Managers At Work," shared real-world success lessons from NASA, Google, and other organizations. His articles have been published in CIO.com, InfoWorld, Canadian Business, and other organizations. Visit BruceHarpham.com for articles, interviews with tech leaders, and updates on future books.