Nov 16, 2020

Jason Frishman, CEO of Netcapital, Predicts Big Improvements for Reg CF with Increased Funding Cap, Plans for Digital Securities
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Crowdfund Insider, in an interview with Jason Frishman, updates readers on Netcapital’s business and the opportunities created by the recent move by the SEC to raise the Reg CF funding cap.

Nov 6, 2020

Everything You Need to Know About Liquidity and Netcapital Investments: STP Basics
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No one likes feeling like they’ve missed out on something great. Such as when a company you had your eye on closes their offering before you get the chance to invest. Luckily, Netcapital Systems LLC offers a Secondary Transfer Platform (STP) where you can buy or sell shares of companies that have closed their funding rounds on Netcapital. Here are a few basics about the STP:

Interested in investing in private companies?
Check out our current offerings here

Who can sign up to use the platform?

Anyone interested in buying shares can sign up for the platform, without any fees! If you’re an investor interested in selling, be sure to read our information page for specifics on the process.

How do I purchase shares as a new investor?

As a new investor looking to purchase shares, you will need to load funds into your Netcapital wallet before you can create bids for securities. Make sure that your wallet is funded because if there aren’t enough funds in your account your investment won’t be processed.

What if I can’t find a buyer?

If our platform can’t match you with a buyer right away, don’t worry! Your shares are still yours and you can withdraw your request to sell at any time. You can also leave your shares up for sale and wait until there’s an available buyer.

Interested in learning more? Make sure to check out our FAQ or follow us on social media!

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Disclaimer: All information contained in this blog post should not be interpreted as financial or investment advice. Netcapital does not guarantee any return on an investment in any securities. Netcapital Systems LLC is neither a funding portal nor a broker dealer.

Oct 29, 2020

Q&A with Vymedic
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With this year’s cold and flu season starting in the middle of a global pandemic, everyone is asking the same question: how can I stay healthy? We’re offering a solution: Vymune.

Vymedic

What is Vymune?

Vymune is our patented, scientifically proven antiviral.

A few things to know about Vymune:

  • Proven safer and more effective than competing antiviral drugs or supplements
  • Stops viruses instead of just treating the symptoms
  • Non-strain specific
  • Provides superior immune support
  • Favorably reviewed by CDC
  • Does not require a shot, hospital, or doctor visit

How does Vymune work?

Vymune is an all-natural broad-spectrum antiviral composed of amino acids, bioflavonoids, and co-factors. Whether you’ve come down with the flu or another common virus, it works quickly to suppress symptoms by activating your immune system. It also provides superior immune support to protect and defend your health and is safe for everyone, including the elderly, children, pregnant women, and immuno-suppressed individuals.

What is Vymedic’s business model?

Vymune will be sold as convenient, non-prescription melt-away tablets. Our product has a high margin, with a unit cost of $6 and a planned selling price of $20 per unit. We’ll initially target consumers through Amazon before moving to brick and mortar retailers throughout the United States.

When will Vymune be available?

We get this question a lot! We’re collaborating with Oglivy, an award-winning global marketing agency, to develop a custom product rollout for Vymune. We expect a December launch in time for Flu season.

Oct 22, 2020

3 Types of Securities Every Investor Should Know
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Investments in early-stage companies can take many forms. It all depends on what type of security a company is offering. A security represents ownership of or a financial relationship with a company. Here, we’ve outlined the basics of 3 types of securities all investors should know.

1) Convertible Notes

It’s hard to put a price on an idea. But when an early-stage company decides to raise capital, that’s often what they have to do. One of the benefits of a convertible note, according to venture capital firm Quake Capital, is that it delays valuing a company. This is because investments via convertible notes are a form of debt, where investors are paid back later in equity instead of cash. Usually this happens during a later round of funding, when the company has a valuation. The convertible note is converted into equity with a discount to the company’s value.

2) SAFEs

In recent years, an alternative to convertible notes has been gaining popularity: SAFEs or a “Simple Agreement for Future Equity”. SAFEs were created by well-known incubator Y combinator as a less complicated substitute for convertible notes, according to Funder’s Club. The main difference between the two is that a SAFE is not a form of debt.

3) Stocks

Stocks or shares are perhaps the most straightforward and well-known type of security. When you buy a share of a company, you’re buying a piece of that company. However, it is important to note that there are differences between preferred and common shares. One key difference is that preferred shareholders have preference over common shareholders if the company is ever liquidated, meaning they would be paid out first.

Before you invest, you should be sure to double check the type of security the company is offering. Being an informed investor is important. While this blog post is a good place to start, there’s always more to learn! Create an account for updates or take a look at our FAQs for more information.

Oct 12, 2020

Why We Are Building GenesisAI
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Written by GenesisAI CEO Archil Cheishvili

Currently, there are fundamental problems with AI that hold AI innovation back. There is no communication between AIs; there is no way for AIs to exchange data, trade services, learn from each other, or expand their own capabilities.

Furthermore, 99% of companies in need of AI services cannot get AI work done because these organizations cannot afford their own team of experts, nor do they have the technical capabilities to correctly determine from which open-source APIs to grab AI code.

The solution is: GenesisAI

GenesisAI helps companies in need of AI services connect with companies who would like to monetize their AIs. We match unused resources (in-house developed AIs and open-source Github AI code) with companies in need of these resources. The connector of these two parties will unlock trillions of dollars in market value.

GenesisAI’s platform not only connects AI services with companies in need of AI technology but it also enables AIs to connect with each other, trade services, exchange data and be used together to create more complex AI. Our platform solves the most important problems in the field of AI by allowing AIs to interact and learn from each other.

GenesisAI has 4 main goals:

  • To connect companies in need of AI services with companies who would like to monetize their AI technology
  • To connect different AIs with each other to improve their capabilities, which may eventually lead to Artificial General Intelligence
  • To confront the current system of AI oligopolies, where only a handful of large corporations own and operate AIs, thereby improving the accessibility of AI for smaller companies or individuals such as researchers
  • To create a benevolent AI, whose sole goal will be to benefit sentient beings, to make the power of AI available to everyone

We have gathered a team of recognized experts, thought-leaders, and entrepreneurs to solve foundational problems in the field of AI.

It’s time to take back the reins from large oligopolies who currently control the vast majority of AIs. The time has come to make AI better and accessible to all. This is a chance for us to change the world together.

Oct 9, 2020

Everything You Need to Know About Liquidity and Netcapital Investments: Part 2
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Typically, investments in startups are relatively illiquid.

This is because in the private markets, investments in companies usually convert to cash in one of two ways: through going public or getting acquired. For startups, it can take anywhere from a few months to several years for either of those events to happen. For example: Vine was acquired by Twitter before the app even launched (New York Times) while Airbnb, which was founded in 2008, just filed to go public this year (Bloomberg).

Interested in investing in private companies?
Check out our current offerings here

However, things are changing. And as more companies raise capital by offering private securities online, investors are looking for new ways to keep their investments liquid. Netcapital Systems LLC offers one solution: a Secondary Transfer Platform (STP).

The Netcapital Systems STP allows investors to buy and sell shares in companies that have already completed a raise on Netcapital. Through the STP investors can sell their shares, keeping their investments liquid and their portfolios flexible. Meanwhile, buyers who missed the opportunity for an initial investment in a company can have a second chance to invest.

It’s important to note that buying and selling shares in startups is not like the day trading you might see in the public markets. In our next installment of this series, we’ll be walking you through everything you need to know about Netcapital Systems LLC’s Secondary Trading Platform (STP).

For updates, be sure to follow Netcapital on social media.
You can find us on Twitter, LinkedIn, Facebook, and Instagram.

Disclaimer: All information contained in this blog post should not be interpreted as financial or investment advice. Netcapital does not guarantee any return on an investment in any securities. Netcapital Systems LLC is neither a funding portal nor a broker dealer.

Sep 24, 2020

Everything You Need to Know About Liquidity and Netcapital Investments: Part 1
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If you’ve ever wondered, “How do I make money through investments in private companies?” what you’re really asking about is liquidity.

Interested in investing in private companies?
Check out our current offerings here

Defining Liquidity:

Liquidity, in the broadest sense, is about how quickly something can be turned into cash. You might hear people talk about companies in terms of how “liquid” or “illiquid” they are, but liquidity also applies to securities and assets.

Liquid vs. Illiquid:

Liquidity can be hard to understand in the abstract, so let’s walk through some examples.

If a company owns an asset like an office building, that’s considered a more illiquid asset, because it takes time and money to find a buyer, sell the building and finally convert that asset into cash.

Meanwhile, a security like shares in a public company can be bought and sold pretty easily, making it more liquid.

Liquidity Events

While some angel investors invest because they’re especially passionate about a founder’s vision or the product they’ve created, the goal of most investors is to generate a return on their investment. But how does that work? Generally, through liquidity events.

Liquidity events take what is typically illiquid; securities in private companies, and give investors a chance to convert their ownership into cash. The two most common types of liquidity events are Initial Public Offerings (IPOs) and acquisitions.

So where do securities like the ones you can buy on Netcapital come in? In the rest of our series on liquidity we’ll be going more in depth on liquidity events, liquidity in Netcapital offerings, and how this all relates to you as an investor on Netcapital.

For updates, be sure to follow Netcapital on social media.
You can find us on Twitter, LinkedIn, Facebook, and Instagram.

Sep 16, 2020

5 Reasons to invest in WaterWorks
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Written by WaterWorks CEO Lon Johnson

WaterWorks seeks to advance potential water solutions by introducing investors to opportunities in technology companies and projects through our online investing platform: waterworksfund.com

  • Online investing is growing. According to Crowdfund Capital Advisors, July of 2020 saw $23.2 million in investment commitments, making it the best month ever for Reg CF online investing[1]. That same firm estimates that in the next year over 400,000 Americans will invest more than $250 million into startups and small firms[2]. In addition, the SEC recently proposed increasing the amount allowed to be raised via Reg CF from $1,070,000 to $5,000,000.
  • We’re niche and sector focused. By becoming industry leaders in one sector, we believe this will lead to greater trust by water innovators seeking capital and investors seeking opportunity in the sector. With each new investment offering and investment transaction, we’re building a community of water innovators and investors that may consider additional offerings.
  • Strong and experienced team and partnerships. In addition to national water, finance and policy leaders, our team includes individuals who helped transform national political fundraising from an event and insider driven process to an online inclusive digital process. We seek to do it again for water.
  • America has water problems. And we believe because of climate change, population growth, aging infrastructure and limited public dollars it’s going to get worse. The time to invest and support new water technologies and potential solutions is now.
  • We’re merging growing trends. Online investing[1]. Sustainable investing[3]. The Water Market[4]. All growing and being merged at WaterWorks.
  1. Online Investment Sees the Highest Month of Activity in July Small Firms Most Affected by COVID-19 Find Ready Investors and Capital The Time is Now for Washington to Invest Alongside the Crowd
  2. Regulation Crowdfunding Finishes its Fourth Year with Impressive Results - Crowdfund Capital Advisors says Industry Poised for Significant Growth
  3. Sustainable and Impact Investing
  4. Water and Wastewater Treatment Market Worth $211.3 Billion by 2025, Growing at a CAGR of 6.5% from 2019- Global Market Opportunity Analysis and Industry Forecasts by Meticulous Research®
Sep 16, 2020

Watch Party
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Watch Party’s story starts with Mark. Mark watches a lot of TV, which is (surprise!) how he came up with this idea. We’re constantly surprised by the shows he shares with us, and the linkage, or lack-there-of, between them. They don’t fall neatly into any one genre.

Mark truly loves television, and so does the rest of our team. We understand that identifying with a TV character makes you feel seen, or a little less misunderstood. We know the feeling you get when your favorite show ends, or your favorite character is killed off. It feels like you lost a friend. The disappointment you feel when your favorite show gets cancelled? We know it well too. And we’re not embarrassed to admit our familiarity with the message Netflix sends when you’re on a TV bender.

We found ourselves experiencing the same pain points, and asking the same questions. Why is it so hard to find a new show to watch that I would actually like? Why do I get so pigeon holed in Netflix’s algorithm that their suggestions are useless? Why can’t I easily find the shows my friends are watching? Why do I always get stuck in group chats where there’s no respect for spoiler alerts? I’ve been paying for Showtime for months to watch this one show, why didn’t I know it was also on Netflix?

Why isn’t there an app for all of this? Why don’t we build one?

While we can’t clean up those empty Ben and Jerry’s pints for you when your favorite show ends, we can connect you with your friends and the shows they watch so you can find your next show to rave about. That way you won’t have to spend your 3rd night in a row scrolling through Netflix, finding nothing, then going to bed frustrated. Does that sound like a personal problem? That’s because for us, it is. That’s why we’re the right guys (and gal) for the job. So, what’s the hold up? Let us help you find your next favorite show.

Aug 28, 2020

Factors to Consider Before Investing: The Business Model
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In any investment opportunity, a good understanding of the company you’re investing in is essential. At the heart of every company, whether it’s an established public company or an emerging start-up, is a business model.

The Business Model

Investopedia defines a business model as “a company’s plan for making a profit”. That plan can encompass many things: products, services, target markets, market strategy — the list goes on.

If you’re interested in investing in a company, here are a few questions to ask yourself to better understand the company’s business model:

  1. What problem is the company solving, and is it a real problem that people or businesses have?
  2. What is the company’s solution to the problem?
  3. How does the company’s solution differ from other available solutions?
  4. How does this solution generate revenue?
  5. Who is their target customer?

Considering B2B or B2C Business Models

If the startup is a B2B company, meaning that their product or service is for businesses, you should consider if they’ve laid out a pathway to reach companies in their target industry. If the startup is B2C, meaning that their product or service is for customers, you could consider if the company is solving a problem you’ve had and if you would use their solution over other ones in the market.

It may be helpful to use yourself and people you know as yardsticks to measure how exciting or useful a startup might be. Keep in mind that if you’re excited about a company’s solution then there’s a chance that potential customers may be too.

Curious about investment opportunities on Netcapital? You can check out our active offerings here.
You can find us on Twitter, LinkedIn, Facebook, and Instagram.

Disclaimer: All information contained in this blog post should not be interpreted as financial or investment advice. Netcapital does not guarantee any return on an investment in any securities.

Aug 28, 2020

The Next Generation of Banking
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FinTron was created with a simple goal - to accelerate the financial stability of my generation, the mobile generation (Y and Z), by transforming how we budget, bank, and invest. While a senior at Sacred Heart University, I studied business, finance, and programming. Finance had always been intuitive to me, but investing was intimidating for many of my friends and colleagues, and personal finance was difficult to grasp. I launched FinTron because I knew there was a way to make investing and banking less intimidating and expensive for people my age.

Fast forward, and 18 months later, we have raised over $550,000. FinTron now has a full-time staff of six and a rotating intern cohort of 5 - 15 students. We’ve created an innovative and straightforward interface that will offer free ATM withdrawals worldwide, interest-bearing checking accounts, unlimited trading in 600+ fractional securities, recurring investments in three popular index funds, and a master budgeting tool, among other features, for just $2 a month. We also built a simulated stock trading game to help people of all ages learn to invest and compete for cash prizes before investing their own money.

The mobile generation remains a hard target market for most major financial institutions. 40% of millennials have never had investment exposure, and unchecked discretionary spending has left 46% of the mobile generation with $0 in their savings accounts. We built FinTron to fix this.

First, I built a young tech/product team to develop a product for young people. After creating a great product, driven by a social mission, we recruited some of the most experienced financiers and C-Suite level executives in the industry to guide us through the regulatory environment and collaborate with us on everything from digital marketing to product strategy. Our BOD and C-Suite directors include Executives from Deutsche Bank, Kraft Heinz, General Mills, and UBS. We’ve even partnered with APEX Clearing Corporation, one of the most popular FinTech clearing firms in the United States, the former clearing firm of Robinhood and current clearing firm of Stash, SoFi, and FirsTrade.

Aug 27, 2020

3 Things Investors Should Know Before Investing in Private Companies Online
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Whether you’ve just started building your investment portfolio or you’re a seasoned angel investor, there are a few things you need to know before you invest in private companies online. Today we’re answering three common questions investors have about investing in online private market offerings.

What kind of securities are offered?

There’s a broad range of securities that private companies can offer — common stock, convertible notes, SAFEs, preferred stock. The type of security offered differs by the online investment platform and issuing company, so be sure to check before you invest. Companies on Netcapital typically offer common stock.

How do I keep track of my investments?

For non-accredited investors, keeping track of investments is especially important. This is because your annual funding portal investment limit includes investments made across all funding portals. If you choose to only invest through one portal, managing your investments may be simpler since everything will be in one place.

If you decide to invest on multiple investment platforms, you can still track your investments through services like KingsCrowd, a ratings and analytics platform for online private markets. KingsCrowd offers a tool that lets you create and track your investment portfolio.

How do I get updates on my investment?

Online investment platforms work to facilitate investments — following up on your investment is up to you. You should be proactive about staying up to date with the latest developments and news on the companies you invest in. Follow their social media accounts, track the company on KingsCrowd, sign up to join their email list, and keep an eye out on industry news and trends. If a company’s online raise is ongoing, you should also check their offering page for updated information.

While these questions are a good starting point for learning about online private markets, there’s always more to learn! Create an account for updates or take a look at our FAQs for more information.

Aug 21, 2020

How One Super Bowl Champion is Entering the Music Tech Space
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Dome Audio Inc. is a tech company, patent holder, and producer of a disruptive proprietary headphone, specifically, bluetooth, bone conduction, surround sound headphone, with interchangeable Noise Isolation Dome Covers, notably, a fashion accessory.

Dome is East Coast-based, established in January 2018. Its founder and IP developer, Ben White, is a veteran of the music industry. His decades as a professional musician, songwriter, and producer and engineer have afforded him invaluable insight into audio and sound fidelity.

His partner Tim Wright, who is the Chief Strategy Officer, is an NFL Super Bowl Champion and business owner of The Wright Cut. He is a graduate of Rutgers University and has more than ten years of entrepreneurial experience.

Dome D4 Headphones is a proprietary design in its third iteration prototype and currently in the manufacturing evaluation and pre-production phase.

Dome's business model is centered around three pivotal concepts:

  • Brand Collaborations, via Dome's proprietary, "Headphone Real Estate," specifically, Dome Covers
  • Scarcity Marketing, via strategic marketing campaigns and limited product "runs"
  • E-commerce via dropship distribution.

Dome Audio could be viewed as a "Super Boutique Tech Company," who doesn't claim to have the "best sound" in headphones, but instead the most innovative, versatile, fashionable, and functional "audio-wear" headphones in the headphone space. And yes, the audio fidelity is as bonafide as it is unique!

Consumer demand will be strategically stimulated via "Branding Themes," i.e., campaigns premiering Dome headphones and "limited edition" Dome Covers, as well as other brand (collaborative partners) campaigns.

Dome's patented technology offers consumers options, via its proprietary "open ear" full-fidelity audio experience and its interchangeable "fashion wear" Dome Covers, not found amongst any headphone competitors in the marketplace.

Aug 14, 2020

How SnapShyft is building trust in the labor market
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How does the SnapShyft Labor Marketplace compare to the multitude of third-party staffing solutions? Here are some examples of how we build trust:

Fully Screened — Principal among these is the extensive screening and diligence process professionals go through before gaining approval to use the platform. This process includes thorough criminal background checks and verifications, reference checks, industry certifications, et al. Once approved, professionals must abide by the terms and Community Guidelines to remain active members of the community.

Transparency — We do not apply a percentage markup to hourly rates. Instead, we charge businesses a flat success fee for any successfully worked shifts. This means the rate a company pays per hour is exactly what the professionals receive in their bank accounts. To date, workers are earning an average of 50% more per hour than the national industry rates; and this excludes any earned tips.

Vertical/Sector Focus — SnapShyft is hyper-focused on the foodservice/hospitality and food manufacturing sectors. This allows us to be industry exclusive, leveraging our expertise and the vast ecosystem of workers in this space, allowing workers to leverage their skillsets on-the-fly to generate additional income and pay their bills; while providing a consistent & reliable solution to the businesses.

No Bias/No Discrimination — We built a blind match system; in other words, we don't allow businesses to actively pick and choose between available interested professionals that wish to work a shift. Through diligent research, we have found that such "selection" leads to severe discrimination and bias; from the outset, we chose to ensure diversity and inclusivity.

Execution is Everything — SnapShyft has a fulfillment rate of +94% (compared to 34% industry average); 3X the fulfillment means we can deliver peace of mind for the businesses in need — Execution is everything!

Jul 28, 2020

Due Diligence 101
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Due diligence is a relatively nebulous term. According to TechCrunch, performing due diligence on a company largely depends on a company’s stage, the industry sector, the opportunity itself, and of course, who is doing the vetting.

For companies trading in public stock exchanges, such as NASDAQ and the New York Stock Exchange, due diligence includes monitored disclosures and coordination with regulatory authorities such as the Securities and Exchange Commission (SEC).

In the world of venture capital (VC), due diligence is considered to be more of a black box — every VC firm conducts its own due diligence, which means there is a wide-range of methods. These methods usually include looking at financial statements and determining market fit. Ultimately, VCs conduct due diligence with a goal in mind: determining if they want to invest or not.

Investing on Netcapital’s platform enables you to act as your own venture capital firm — whether or not an investment is good and aligns with your investment strategy is up to you. Due diligence is an important step in any investment, and whether you’re an experienced angel or a first-time investor, Netcapital provides you with a level playing field to make that step easier and transparent. This process includes a 144 point checklist, a background check on the company leadership and a review of financial documents.

As an investor on Netcapital, you should conduct your own due diligence. Here are a few ways to get started:

  • Read the company’s financial documents. You can find these by scrolling to the bottom of an offering page or using the drop down menu at the top of the page and selecting “financials”
  • Ask the founders questions
  • Research the company and the market
  • Listen to a live Q&A and participate
  • Take a look at how far along the product or service is, and whether there is there any customer traction
  • If the product or service is widely available, try using it and see if you like it
  • Check the company profile on a ratings and analytics platform for online private investments, such as KingsCrowd. KingsCrowd previously raised money on Netcapital’s platform.
  • Discuss the opportunity with other potential investors through Netcapital’s public forum

Being an informed investor is crucial, and due diligence is a large part of that. Netcapital is committed to providing a secure transaction platform and access to necessary information so that you can stay informed while making your own early-stage investment decisions.

To learn more about private market investment opportunities, follow Netcapital on social media.
You can find us on Twitter, LinkedIn, Facebook, and Instagram.

Jul 28, 2020

Factors to Consider Before You Invest: The Founding Team
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As more private market investment opportunities become available online through platforms like Netcapital, you may be asking yourself, “How do I decide what to invest in?”. Ultimately, the answer to that question will be based on your needs and interests. If you’re not sure where to start, Netcapital is posting a series of blog posts on factors you should consider before investing. Last time, we covered risk. Today, we’re discussing the founding team.

LEARN MORE: Curious about investment opportunities on Netcapital? You can check out our active offerings here.

Founders are often the visionaries behind the company, the engine that keeps the whole operation moving forward. As the face and heart of the company, the leadership team can be an important element of the success of an early-stage startup. So if you find an offering you’re interested in, you may want to consider who their team is.

Here are a few questions you could consider when you’re looking at a company’s leadership team:

  • Has anyone on the team held a business leadership position before?
  • Do the founders have any expertise in the industry they’re trying to disrupt or innovate?
  • Do the skill sets of the founders complement each other?
  • Are any of the founders experienced entrepreneurs?
  • Have any of the founders ever had a successful exit?
  • Are the founders passionate about their company? Does their pitch make you feel excited?

On Netcapital’s platform, you can easily find a company’s founding team towards the bottom of their offering page or by navigating to the “team” section from the drop down menu under “pitch”. Reading all of the leadership team’s profiles will allow you to better understand their experience and background. If you want more information, try Googling the team members or following them on LinkedIn. You can also use the Q&A section of a company’s Netcapital offering page to ask the founders questions. Additionally, Demo Days are a great interactive way to see the people behind the company you’re interested in.

Founding a startup company can be a long winding road for some and a direct path forward for others. A good understanding of a company’s leadership team can help you gauge how they’ll navigate their own entrepreneurial journey.

Follow Netcapital on social media to learn more about private market investment opportunities.
You can find us on Twitter, LinkedIn, Facebook, and Instagram.

Disclaimer: All information contained in this blog post should not be interpreted as financial or investment advice. Netcapital does not guarantee any return on an investment in any securities.

Jul 15, 2020

How Startup Funding May be Changing in Response to Covid-19
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Venture capital (VC), like most industries, is rapidly changing in response to Covid-19. Following years of record deals and large investments, VC firms are switching gears to a more defensive and slower-paced strategy, according to Pitchbook. The results of this are already becoming clear - in the first three months of the year, global VC funding was down 30%. This decline in private market funding is the second steepest in a decade and is expected to continue throughout this year, according to CB Insights.

Many VCs that are still providing funding are sticking with what they know and continuing to work with startups already in their portfolio. “VCs will need to focus on portfolio companies, maintain reserves and increase rigor around diligence and post-investment execution,” writes Kareem Aly, a principal at Felicis Ventures, in a post for Crunchbase.

While VCs are adapting to a changing landscape, startups still need funding. Pitchbook estimates that at least 7,200 companies will be seeking funding soon based on the timing of their last round of funding. Additionally, many startups are in need of support following Covid-19 related challenges.

Private market investment platforms such as Netcapital have recently been further empowered to potentially fill some of the void left by VCs. In early May, the SEC temporarily changed the rules that allow startups to host equity offerings online. The changes were meant to expedite the process for online listings for small, established companies directly or indirectly affected by Covid-19.

Small businesses, including early-stage startups, are the foundation of our economy, generating roughly 44% of U.S. economic activity, creating two thirds of net new jobs, and fostering innovation. Funding for these companies is evolving, but remains essential. Following the temporary SEC rule changes and proposed new rules allowing bigger raises, private market investment opportunities may become a larger part of what sustains small businesses and startups.

Interested in learning more about Netcapital and private market investment opportunities?
Follow Netcapital on Twitter, LinkedIn, Facebook, and Instagram.

Jul 13, 2020

Credit/Debit Cards - A New, Convenient and Secure Way to Invest
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Great News. Netcapital has given you more options and expanded the available payment methods you can use to fund your investment commitments! You can now choose to pay for your investments on Netcapital with the convenience and familiarity of using your credit or debit card. With the addition of credit/debit cards, investors can pick from one of 4 ways to invest: by credit/debit card, ACH transfer, wire transfer or transfer from your Netcapital wallet account.

To fund your investment commitment using your credit/debit card, simply select this option and include your card details as part of the investment check out process at www.netcapital.com.

For more detailed information about using credit/debit cards, please click here.

Jul 2, 2020

Factors to Consider Before Investing in a Startup: Risk
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As more private market investment opportunities become available online through platforms like Netcapital, you may be asking yourself, “How do I decide what to invest in?”. Ultimately, the answer to that question will be based on your needs and interests. But if you’re not sure where to start, Netcapital is posting a series of blog posts on factors you should consider before investing. Today, we’re discussing risk.

LEARN MORE: Curious about investment opportunities on Netcapital? You can check out our active offerings here!

Risk

Every investment opportunity has some degree of risk. In the case of startup companies, early-stage investments can potentially yield high rewards, but there’s a high risk of loss as well. Companies with billion dollar valuations, known colloquially as “unicorns” are called that for a reason: they’re relatively rare. Startups don’t always succeed, so consider outlining a budget for your early-stage investment portfolio before you invest. When budgeting, you should take into consideration your legal investment limit for online offerings, which is determined by your annual income and/or your net worth. You can calculate your investment limit by going to Netcapital’s educational materials and risks page.

Although each deal on its own carries high risk, as a whole, investing in early-stage startups can potentially provide favorable returns. Diversification, or investing in multiple opportunities, can minimize the chances of an unexpected market event weakening your whole portfolio. For example, having a diverse portfolio helped some investors weather the 2008-2009 market following the financial crisis, according to Fidelity Investments. After outlining your initial budget, it may be advantageous to consider spreading out your investments. For example, if your budget is $5,000, you could choose to invest all $5,000 in the first offering that catches your eye. Or you could choose to invest $500 in 10 companies, or even $250 in 20 companies.

Early-stage investment opportunities are exciting - you have the chance to get involved in cutting-edge technologies or support innovators who are hoping to shake up the world. And when you’re realistic and purposeful about your investing strategy, that excitement transforms into an opportunity to invest in startups that you’re passionate about, without breaking the bank.

Disclaimer: All information contained in this blog post should not be interpreted as financial or investment advice. Netcapital does not guarantee any return on an investment in any securities.

Jun 19, 2020

How to Support Black Founders? Invest!
BLOG

Invest in Black Founders

The entrepreneurial journey can be particularly long and difficult if you are a minority founder, and this is especially true for Black founders. Netcapital recognizes this and recently highlighted five Black founders currently raising on the platform through a virtual demo day.

WATCH: Invest in Black Founders - a Netcapital Demo Day on Netcapital’s YouTube channel.

Netcapital had all-time high attendance at the event. The five presenting founders included leaders from Charles & Company, Deuce Drone, Dome Audio, ecoText , and Watch Party.

Invest in Black Founders - Startups

Startups are fast-growing businesses that need to raise capital in order to launch and scale. Traditional ways of raising capital such as pitching to venture capital firms (VCs) and institutional investors are historically less accessible to minority founders. Although several VCs have now committed to raising funds specifically for minority founders, these funds may take time to make an impact.

However, due to SEC rule changes in recent years, anyone can invest in startups through offerings on fundraising platforms such as Netcapital. You can support Black-founded companies by buying shares for as little as $100, or less in some cases. Investing can be a long-term commitment to supporting and interacting with a business in a way that has a greater impact than a one-time purchase.

Racial injustice is front and center in the news right now, but when the media coverage stops and the protests slow down, the commitment to supporting Black founders and Black business leaders must continue. Check in on the companies you follow, buy from, and invest in. Become a regular customer and their biggest cheerleader. There’s always a way to help make a difference, and that can start with you, your dollar, and your follow button.

Social

Interested in learning more about Netcapital and private market investment opportunities? Follow Netcapital onTwitter, LinkedIn, Facebook, and Instagram.

Jun 6, 2020

What is KYC?
ARTICLE

What are the purpose of KYC requirements?

The objective of KYC guidelines is to prevent businesses from being used by criminal elements for money laundering. Related procedures also enable businesses to better understand their customers and their financial dealings. This helps them manage their risks in a well-judged manner. Today, KYC principles apply to banks as well as different online businesses.

When were KYC requirements established in the U.S?

Pursuant to the USA Patriot Act of 2001, the Secretary of the Treasury was required to finalize regulations before October 26, 2002 making KYC mandatory for all US banks.

What are KYC requirements?

The know your customer or know your client (KYC) guidelines in financial services require that professionals make an effort to verify the identity, suitability, and risks involved with maintaining a business relationship. The procedures fit within the broader scope of a bank's Anti-Money Laundering (AML) policy. KYC processes are also employed by companies of all sizes for the purpose of ensuring their proposed customers, agents, consultants, or distributors are anti-bribery compliant, and are actually who they claim to be. Banks, insurers, export creditors and other financial institutions are increasingly demanding that customers provide detailed due diligence information. Initially, these regulations were imposed only on the financial institutions but now the non-financial industry, fintech, virtual assets dealers, and even the non-profit organizations are liable to oblige.

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 CrowdfundingTemporary 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.