Netcapital Pursues Broker-Dealer License to Increase Potential Revenue Generation

Rhea-AI Summary

Netcapital Inc. (NCPL) announced that its subsidiary, Netcapital Securities Inc., applied for a broker-dealer license with FINRA to expand service offerings beyond Regulation Crowdfunding. The move aims to increase revenue through Reg A+ and Reg D deals, additional fees from client referrals, and partnerships with other broker-dealers.

Positive

• Expanding service offerings beyond Regulation Crowdfunding to include Reg A+ and Reg D deals can attract larger investments, potentially increasing revenue for Netcapital Inc.

• Generating additional fees from Reg A+ and Reg D offerings on the Netcapital platform can contribute to revenue growth and enhance the company's financial performance.

• Leveraging strategic partnerships with other broker-dealers to distribute offerings of issuers using the Netcapital platform can help maximize market penetration and optimize capital raising efforts.

Negative

• The application for a broker-dealer license is subject to regulatory approval from FINRA and the SEC, with no guarantee of approval or timeline for expansion of services, posing a potential risk to Netcapital's growth strategy.

• While the move to become a registered broker-dealer can open new revenue streams, the process may involve significant time and resources without immediate returns, impacting the company's financial outlook in the short term.

• Company intends to expand service offerings to include Reg A+ and Reg D deals and broker-dealer partnerships

BOSTON--(BUSINESS WIRE)-- Netcapital Inc. (Nasdaq: NCPL, NCPLW) (the “Company”), a digital private capital markets ecosystem, today announced that its wholly-owned subsidiary, Netcapital Securities Inc., has applied for broker-dealer registration with the Financial Industry Regulatory Authority (“FINRA”). This marks a significant step in the Company’s evolution as it looks to expand upon its current service offerings and support private companies with larger and later stage financings than are currently permitted under Regulation Crowdfunding (“Reg CF”).

Netcapital believes that by having a registered broker-dealer, it will create opportunities to expand its revenue base by:

1. Hosting and generating additional fees from Reg A+ and Reg D offerings on the Netcapital platform. Under Reg A+, companies can raise up to $75 million from accredited and non-accredited investors every 12 months (versus $5 million permitted under Reg CF). Additionally, under Reg D 506(c), companies can raise unlimited amounts of capital from accredited investors using general solicitation.

2. Earning additional fees in connection with offerings that may result from the introduction of clients to other FINRA broker-dealers.

3. Expanding Netcapital’s distribution capabilities by leveraging strategic partnerships with other broker-dealers to distribute offerings of issuers that utilize the Netcapital platform to a wider range of investors in order to maximize market penetration and optimize capital raising efforts.

“We believe that this represents a significant step for Netcapital. We continue to seek to build out our service offerings for investors seeking opportunities and for companies aiming to raise capital, while expanding our ecosystem and addressable market,” said Martin Kay, CEO of Netcapital Inc. "This is an important component of our growth strategy, and furthers the value proposition for our shareholders.”

Netcapital Securities Inc.’s application to become a registered broker-dealer remains subject to regulatory approval and/or licensing from the Financial Regulatory Authority (FINRA) and the Securities and Exchange Commission (SEC). No assurance can be given as to when or if such approvals may be granted or when, if at all, Netcapital will be able to expand the services it offers.

About Netcapital Inc.

Netcapital Inc. is a fintech company with a scalable technology platform that allows private companies to raise capital online and provides private equity investment opportunities to investors. The Company's consulting group, Netcapital Advisors, provides marketing and strategic advice and takes equity positions in select companies. The Company’s funding portal, Netcapital Funding Portal, Inc. is registered with the U.S. Securities & Exchange Commission (SEC) and is a member of the Financial Industry Regulatory Authority (FINRA), a registered national securities association.

Forward Looking Statements

The information contained herein includes forward-looking statements. These statements relate to future events or to our future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. You should not place undue reliance on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and which could, and likely will, materially affect actual results, levels of activity, performance or achievements. Any forward-looking statement reflects our current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. We assume no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240508905678/en/

Investor Contact

800-460-0815

ir@netcapital.com

Source: Netcapital Inc.

FAQ

What is the stock symbol of Netcapital Inc. mentioned in the press release?

Netcapital Inc. is traded under the symbols NCPL and NCPLW on Nasdaq.

What are the services Netcapital Inc. aims to expand with the broker-dealer license application?

Netcapital Inc. plans to offer Reg A+ and Reg D deals, in addition to supporting larger and later stage financings for private companies.

What is the potential revenue generation strategy mentioned in the press release?

Netcapital Inc. aims to increase revenue by hosting Reg A+ and Reg D offerings, earning fees from client referrals, and leveraging partnerships with other broker-dealers.