May 6, 2020

Summary of SEC’s New Flexibility for Companies to Use Regulation Crowdfunding to Meet with Capital Needs
PRESS RELEASE

On May 4th, the SEC announced that it is providing temporary, conditional relief for established smaller companies affected by COVID-19 that may look to meet their urgent funding needs through a Regulation Crowdfunding offering.

What Companies Are Eligible?

In addition to meeting the other eligibility requirements to make an offering under Regulation Crowdfunding, your company cannot have been organized and cannot have been operating less than six months prior to the commencement of the offering; and if your company has sold securities in a Regulation Crowdfunding offering in the past, it must have complied with the requirements in section 4A(b) of the Securities Act and the related rules.

If your company is eligible, these amendments will let you:

  • Start your offering without financial statements
  • Reduce the risk that investors withdraw their investment commitments
  • Close your offering sooner

These actions by the SEC will expedite the offering process for eligible companies by providing relief from certain rules with respect to the timing of a company's offering and the financial statements required. To take advantage of the temporary rules, a company must meet enhanced eligibility requirements and provide clear, prominent disclosure to investors about its reliance on the relief. The relief will apply to offerings launched between the effective date of the temporary rules and Aug. 31, 2020.

The temporary rules provide flexibility for issuers that meet certain eligibility criteria to assess interest in a Regulation Crowdfunding offering prior to preparation of full offering materials, and then once launched, to close such an offering and have access to funds sooner than would be possible in the absence of the temporary relief. The temporary rules also provide an exemption from certain financial statement review requirements for issuers offering more than $107,000 but not more than $250,000 in securities in reliance on Regulation Crowdfunding within a 12-month period.

"In the current environment, many established small businesses are facing challenges accessing urgently needed capital in a timely and cost-effective manner," said SEC Chairman Jay Clayton.

The table below summarizes the flexibility for issuers to make greater use of Regulation Crowdfunding to meet their fundraising goals during this period.

How Netcapital Can Help

Netcapital is here to assist you during this difficult and uncertain time and help you realize your capital raising needs. Please contact us at team@netcapital.com and one of our business development teammates will promptly respond to your inquiries. Thank you.

Comparison Table - Regulation Crowdfunding Temporary Changes

The following table summarizes the current rules and what’s changed with these temporary amendments:

RequirementExisting Regulation Crowdfunding Temporary Amendment
EligibilityThe exemption is not available to:
  • Non-U.S. issuers;
  • Issuers that are required to file reports under Section 13(a) or 15(d) of the Securities Exchange Act of 1934;
  • Investment companies;
  • Blank check companies;
  • Issuers that are disqualified under Regulation Crowdfunding’s disqualification rules; and
  • Issuers that have failed to file the annual reports required under Regulation Crowdfunding during the two years immediately preceding the filing of the offering statement
To rely on the temporary rules, issuers must meet the existing eligibility criteria PLUS:
  • The issuer cannot have been organized and cannot have been operating less than six months prior to the commencement of the offering; and
  • An issuer that has sold securities in a Regulation Crowdfunding offering in the past, must have complied with the requirements in section 4A(b) of the Securities Act and the related rules.
Offers PermittedAfter filing of offering statement (including financial statements)After filing of offering statement, but financial statements may be initially omitted (if not otherwise available)
Investment Commitments AcceptedAfter filing of offering statement (including financial statements)After filing of offering statement that includes financial statements or amended offering statement that includes financial statements
Financial statements required when issuer is offering more than $107,000 and not more than $250,000 in a 12-month periodFinancial statements of the issuer reviewed by a public accountant that is independent of the issuerFinancial statements of the issuer and certain information from the issuer’s Federal income tax returns, both certified by the principal executive officer
Sales permittedAfter the information in an offering statement is publicly available for at least 21 daysAs soon as an issuer has received binding investment commitments covering the target offering amount (note: commitments are not binding until 48 hours after they are given)
Early closing permittedOnce target amount is reached if:
  • The offering remains open for a minimum of 21 days;
  • The intermediary provides notice about the new offering deadline at least five business days prior to the new offering deadline;
  • Investors are given the opportunity to reconsider their investment decision and to cancel their investment commitment until 48 hours prior to the new offering deadline; and
  • At the time of the new offering deadline, the issuer continues to meet or exceed the target offering amount.
As soon as binding commitments are received reaching target amount if:
  • The issuer has complied with the disclosure requirements in temporary Rule 201(z);
  • The intermediary provides notice that the target offering amount has been met; and
  • At the time of the closing of the offering, the issuer continues to meet or exceed the target offering amount.
Cancellations of investment commitments permittedFor any reason until 48 hours prior to the deadline identified in the issuer’s offering materials. Thereafter, an investor is not able to cancel any investment commitments made within the final 48 hours of the offering (except in the event of a material change to the offering).For any reason for 48 hours from the time of the investor’s investment commitment (or such later period as the issuer may designate). After such 48 hour period, an investment commitment may not be cancelled unless there is a material change to the offering.

For more detailed information, below are links to the SEC's press release and to the temporary rule:


SEC Press Release
Temporary Rules PDF

Apr 24, 2020

The Future of Ed-Tech Introduces A New Pattern of Play
ARTICLE

There’s a remarkable new trend in toys—the increasing popularity of toddler learning toys. The smart toy industry is booming. Displacing traditional console-based toys, smart toys are expected to grow by 69% annually over the next five years. Why this growth-spurt? In-app purchases, which are tied to the growing popularity of smartphone-connected toys.

Thinker-Tinker’s interactive products transform mindless screen time into active playtime. We are bringing multi-platform EDU-tainment experiences to families. We are a company built around interactive learning experiences. Our flagship product, Octobo, is an award-winning educational multi-sensory smart plush robot that enables development in an interactive environment.

Led by Yuting Su, we specialize in a new pattern of play. Following her two Masters and the birth of her son, she focused her background in technology and interactive media towards toddler educational toys. With our plush robot, our company has been selected as a Techcrunch Top Pick, and finalist for Last Gadget Standing at CES and SXSW Innovation Awards. We are also working on an interactive music game for kids with Universal DreamWorks!

The best developmental activities your child can learn are through play. Play is crucial to a healthy brain development. Studies show that some of the best brain and body boosting activities for toddlers are gross-motor skills, fine-motor skills, social, sensory, and music. According to Romper, Octobo combines all of the technology and interaction of a tech toy with the comforting softness of a stuffed animal and can work for any kid in the family with activities for varying developmental stages.

Bracelin, editor of the Las Vegas Review-Journal, discussed Octobo’s interactivity.

“Our kids are going to be on screens a lot, so how do we make that learning and how to make that something more active than just watching Youtube. Octobo is interesting in how it is a single toy that operates on many different levels.”

We invite you to join us in creating the future of kids tech beyond Octobo. The world is getting smarter and so should play. Join the team at the forefront of innovative creations!

Apr 21, 2020

Q&A with John Fanning Jr, CEO of Zelgor Inc.
ARTICLE

Hey Everyone,

This is John Fanning Jr, CEO of Zelgor Inc. I’ve received a lot of great questions and wanted to answer some of the most frequently asked about our Universe.

What is the market opportunity for mobile games?
The mobile games industry makes up $86.5B of the $150B+ global games market. One successful game can drive a company to multi-billion dollar valuations. We’ve already seen it with companies like Supercell (Clash of Clans) and King.com (Candy Crush). Games like Pokémon GO have generated as much as $2.5M in revenue in a single day.

How will Zelgor make money?
Our games are free to play, while users can pay for virtual items like costumes and spaceships for their Noobs. Fortnite has been quite successful using this method, bringing in as much as $2.4B in one year. We also plan to leverage in-game sponsorships, creative ads, and merchandising.

What does your partnership with Disruptor Beam mean for Zelgor?
Disruptor Beam is best known for taking media franchises like Star Trek and Game of Thrones and turning them into highly successful mobile games. As one of the first companies to partner with Disruptor Beam, we'll be using their engine to develop Noobs in Space quickly in a way that is both efficient and scalable.

When will Noobs in Space be available in the App Store?
We have planned for 4-5 months of development time after our offering closes, leading to a launch in test markets. We began ramping up development in March, and for those who want to play right away, sign up to be a tester on our website zelgor.com.

Screenshots of Zelgor’s first game, Noobs in Space

If you want to help the Noobs take over the Universe, invest today at netapital.com/companies/zelgor.

Feb 27, 2020

Jason Frishman on Startup Life podcast
ARTICLE

Jason Frishman discusses the creation and the business of Netcapital in an interview with Startup Life podcast host Ande Lyons, who is a startup founder, coach and mentor.
Nov 25, 2019

Why are we building for small food companies?
GUEST BLOG by Raveler

We know how small business works, we know that there is pain there, and we know that other companies are not serving their needs.

An investor once asked: “why is Raveler targeting small businesses, rather than large corporate chains who can spend more money on software?” It’s a valid question- the food business is hard, and large corporations have more money to throw at the operational issues that bog them down. However, we are committed to serving smaller businesses because it is a cornerstone of our central business thesis.

The small food business is what we know best. Our unfair advantage as a company is the fact that both co-founders have spent over a decade in the trenches of small food business. We know how to talk to people about their operations, we know the right questions to ask, and we know how to solve their problems. In short, we can sell to small businesses.

There is a lot of complexity in the food business, and it’s hard to manage. Inventory of perishable materials, FDA compliance, and production scheduling take up a lot of time. Currently, best practice is to use sticky notes and spreadsheets. Although there are plenty of lightweight solutions for POS, Ecommerce, and bookkeeping, operations/manufacturing software is where credit card processing was before Stripe, and where web design was before Squarespace.

Our platform connects the dots and increases efficiency. One customer reports that Raveler saves them eight hours a week, which has increased their production capacity by 50% without adding more staff. It is amazing how much more can get done every day when you’re not constantly chasing papers. That efficiency means all the more to small businesses, which are always strapped for time.

Because everyone else is thinking about big chains, there is a $40Billion market that has yet to be addressed. We have the best team to bring that solution to market, and we are honored and excited to do so.

Nov 14, 2019

BitMovio Launches Capital Raise on Netcapital Funding Portal
ARTICLE

Featuring a freemium revenue model, BitMovio is a blockchain-enabled, gamified video entertainment platform built for the Fortnite generation.

To help achieve its mission to democratize the entertainment content distribution and financing model, BitMovio, Inc. is raising growth capital through an offering launching today on Netcapital.

"Beyond subscription (SVOD) and advertising-supported (AVOD) video streaming services, we believe a 3rd lane will emerge - Freemium Video Streaming. This will be a massive opportunity - perhaps even larger than SVOD and AVOD combined - to introduce proven, highly-profitable gamification techniques of the kind perfected by Epic Games in Fortnite into video streaming," said Jerry Kowal, Chief Content Officer and Cofounder of BitMovio.

Oct 9, 2019

How Retirement Investors Can Invest in Private Companies
VIDEO

Netcapital CEO Jason Frishman sat down with Robert Powell of TheStreet.com to discuss how retirement investors can invest in private companies. Mr. Frishman discusses the Regulation Crowdfunding offerings that are performed by Netcapital Funding Portal Inc. and the secondary transfer platform that is provided by Netcapital Systems LLC. Watch the video or listen to the podcast below.

Aug 11, 2019

With new investing rules, you can be part of the crowd that’s funding startups
ARTICLE

Boston Globe: Netcapital CEO Jason Frishman and the company are featured in an article by tech columnist Scott Kirsner on the growing business of investment portals such as Netcapital raising capital to fund startup companies.

Aug 9, 2019

Netcapital Partners with MassChallenge to Help Startups Raise Capital
PRESS RELEASE

We are pleased to announce that Netcapital is partnering with MassChallenge, a global network of startup accelerators, to offer a discount on our capital raising services to current and alumni companies in the MassChallenge Boston program.

MassChallenge Boston supports early-stage startups across all industries through a four-month accelerator program. One hundred companies are currently participating in its Boston Accelerator program.

Boston is a global leader in innovation, and we are excited to partner with a premier accelerator in MassChallenge to help foster that innovation. The technology on our platform should prove very valuable to these startups as they seek alternative routes to financing.

As an in-kind partner, we will offer discounted services to all of the companies actively participating in the MassChallenge program, as well as over 2,300 MassChallenge alumni startups worldwide, that elect to use our platform to raise capital from investors. MassChallenge operates programs in Boston, Rhode Island, Texas, Israel, Switzerland, and Mexico.

Entrepreneurs interested in learning more about Netcapital should contact us at hello@netcapital.com.

Aug 4, 2019

Backed by the State of Kentucky, Braidy Industries Raises $2.5 Million on Netcapital Platform in Offering for Aluminum Company
ARTICLE

Crowdfund Insider: Specialty metals manufacturer Braidy Industries raises $2.5 million on the Netcapital platform, broadening its investor base among main street investors in its home state of Kentucky.

Aug 2, 2019

2012 JOBS Act: Creating More Opportunity For Investors In The Private Markets
ARTICLE

Financial Advisor magazine: Netcapital CEO Jason Frishman writes guest expert commentary piece on the opportunity for investors and their advisors to take advantage of early stage growth opportunities in the private markets through investment portals such as Netcapital.

Jul 9, 2017

Jason Frishman speaks on CNBC’s Mad Money with Jim Cramer
VIDEO

CNBC: Netcapital CEO Jason Frishman is featured on Mad Money with Jim Cramer, discussing the opportunity for investors to gain access to startup companies through portals such as Netcapital.