Netcapital Inc. (NASDAQ: NCPLW)

Netcapital Inc., also known as NCPL, is a fintech company that operates in the financial services industry. The company's primary business activities involve providing private company investment access to accredited and non-accredited investors through its online portal. Netcapital offers a range of services such as onboarding, regulatory filing, compliance review, and marketing to facilitate online capital formation. Additionally, the company provides consulting services to private companies, helping them raise capital through its platform.

The company generates revenue by listing private companies on its funding portal, charging a $5,000 listing fee, a 4.9% portal fee for capital raised at closing, and a 1% success fee paid for with equity of the funding portal customer. Netcapital's primary products and services include onboarding, regulatory filing, compliance review, and marketing, which cater to private companies seeking to raise capital online.

Netcapital operates in a highly competitive industry, facing competition from companies that facilitate online capital formation and the sharing of content and information, companies that enable marketers to display advertising, companies that distribute video and other forms of media content, and companies that provide development platforms for application developers. Despite the competition, Netcapital has a strong emphasis on customer support, and its clients have provided positive feedback regarding its access and onboarding process. The company believes that it provides the lowest cost solution for online capital raising and has a superior access and onboarding of new clients.

The company's customers include a range of private companies, such as KingsCrowd, ChipBrain, Zelgor, MustWatch, C-Reveal Therapeutics, Hiveskill, and Caesar Media Group. Netcapital's major customers for the year ended April 30, 2024, included one customer that constituted 25% of its revenues, a second customer that constituted 22% of its revenues, and a third customer that constituted 22% of its revenues.

Netcapital's investment portfolio includes a range of companies, including KingsCrowd, ChipBrain, Zelgor, MustWatch, C-Reveal Therapeutics, Hiveskill, and Caesar Media Group. As of April 30, 2024, the company's total investments at fair value were $25,333,386.

In addition to its funding portal business, Netcapital has expanded its services to include a secondary trading platform, which allows investors to buy and sell shares of private companies that have raised capital on the platform. The company has also applied for a broker-dealer license, which would enable it to expand its services to include the sale of securities to a wider range of investors.

Netcapital's technology platform is designed to be scalable, real-time, and transaction-processing, enabling the company to process transactions without human intervention. The company's infrastructure is designed to ensure protection from large-scale traffic fluctuations and features a multi-AZ deployment for its database layer. The company has proposed an alternative trading system (ATS) relationship with Templum Markets LLC, which would provide issuers and investors on the Netcapital platform with the potential for greater distribution and liquidity. However, the operation of the Templum ATS is subject to extensive regulation and oversight, and any regulatory delays or objections may result in delays in the company's ability to launch the proposed platform.