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Republic – Now everyone can invest in startups

republic.co

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Re: Republic – Now everyone can invest in startups

#51

Post by antris »

brianwawok wrote: post #40
antris wrote: post #16

Earlier quoted context omitted.

You are absolutely right about the discount. Being skeptical is also good, but on the flip side there is a lot of money floating around in peoples private bank accounts that is seeking an investment target. I mean, how would one invest $10 in a startup through the traditional VC model? There's no way. This model can be seen as an alternative. There's no inherent reason to think of it as a backup for startups that fai…

If your life savings is 10k or even 100k you don't need to invest in startups. Try an index fund.

I agree, but that is beside the point.

Re: Republic – Now everyone can invest in startups

#52

Post by tuna-piano »

Animats wrote: post #30

Interesting. These appear to be JOBS act short-form mini-IPOs.[1] That's something new, which just became possible this year and hasn't been used much. Here's Farm from a Box's SEC filing.[2] Typical crappy terms - no voting rights, no anti-dilution, no transferability for one year, insiders have control. Nobody associated with the project has a farming background. They have two employees. One is a liberal arts major…

So interesting. Seems like we now have two ways for the public to buy shares in companies. On the stock exchanges, we've made it so difficult and expensive (Sarbox and other requirements) - that many companies have chosen to delay or avoid going public. So the government passed more laws to make it easier for companies to go "public" (in a different way), and we now have another system that seems to be a real wild west.

Oh government... solving unintended consequences with more unintended consequences.

Re: Republic – Now everyone can invest in startups

#53

Post by pmen »

Animats wrote: post #30

Interesting. These appear to be JOBS act short-form mini-IPOs.[1] That's something new, which just became possible this year and hasn't been used much. Here's Farm from a Box's SEC filing.[2] Typical crappy terms - no voting rights, no anti-dilution, no transferability for one year, insiders have control. Nobody associated with the project has a farming background. They have two employees. One is a liberal arts major…

It sounds like you might be thinking of Title IV of the JOBS Act (Reg A fundraises, more details here: https://www.sec.gov/oiea/investor-alerts-bulletins/ib_regula...), which are akin to "mini IPOs" and are intended for later-stage companies.

Republic operates exclusively under Title III of the JOBS Act, which was enacted in May of this year and is intended for early-stage companies.

On deal terms, generally speaking it would be impractical for a startup to fundraise via equity crowdfunding if the hundreds or thousands of investors, each putting in as little as $10, were to have voting and information rights. The non-transferability component is actually a legal restriction put in place by the SEC, not a term that any companies raising on Republic have put in place.

Each deal page has a discussion section, if you have questions for the founding team of each company, please do ask :)

Re: Republic – Now everyone can invest in startups

#54

Post by Animats »

pmen wrote: post #53
Animats wrote: post #30

Interesting. These appear to be JOBS act short-form mini-IPOs.[1] That's something new, which just became possible this year and hasn't been used much. Here's Farm from a Box's SEC filing.[2] Typical crappy terms - no voting rights, no anti-dilution, no transferability for one year, insiders have control. Nobody associated with the project has a farming background. They have two employees. One is a liberal arts major…

It sounds like you might be thinking of Title IV of the JOBS Act (Reg A fundraises, more details here: https://www.sec.gov/oiea/investor-alerts-bulletins/ib_regula... ), which are akin to "mini IPOs" and are intended for later-stage companies. Republic operates exclusively under Title III of the JOBS Act, which was enacted in May of this year and is intended for early-stage companies. On deal terms, generally speakin…

On deal terms, generally speaking it would be impractical for a startup to fundraise via equity crowdfunding if the hundreds or thousands of investors, each putting in as little as $10, were to have voting and information rights.

Yeah, right. I get an annual report, a 10-K, and voting rights on every public stock for which I own at least one share.

Re: Republic – Now everyone can invest in startups

#55

Post by pmen »

Animats wrote: post #54
pmen wrote: post #53

Earlier quoted context omitted.

It sounds like you might be thinking of Title IV of the JOBS Act (Reg A fundraises, more details here: https://www.sec.gov/oiea/investor-alerts-bulletins/ib_regula... ), which are akin to "mini IPOs" and are intended for later-stage companies. Republic operates exclusively under Title III of the JOBS Act, which was enacted in May of this year and is intended for early-stage companies. On deal terms, generally speakin…

On deal terms, generally speaking it would be impractical for a startup to fundraise via equity crowdfunding if the hundreds or thousands of investors, each putting in as little as $10, were to have voting and information rights. Yeah, right. I get an annual report, a 10-K, and voting rights on every public stock for which I own at least one share.

Companies raising under Title III file annual reports with the SEC. That said, public companies in which you own stock and private, early-stage startups have vastly different capacities to deal with these issues. The basis for investment in each is also quite different. Apples and oranges.

Re: Republic – Now everyone can invest in startups

#56

Post by clock_tower »

ryandrake wrote: post #47
justrossthings wrote: post #33

Republic - Invest in the startups real investors won't invest in

That strikes me as a very cynical view, and I consider myself to be a pretty cynical guy. You could also make the same argument about other market platforms: "Ebay - Buy things real shoppers won't" "Uber - Get a ride somewhere real taxis won't go" "Monster.com - Hire people real employers won't" Is it really that different?

I'd call the appraisal justified. At least from where I sit, I'd say that the equivalent to eBay or Uber would be listing stock from startups that also have VC funding, and selling actual shares in the company.

Re: Republic – Now everyone can invest in startups

#57

Post by clock_tower »

HillaryBriss wrote: post #10

Is this a signal to the smart money that it's time to get out?

I think it is.

(But personally -- although I can't prove that I'm smart money just yet -- I'd recommend avoiding tech stocks in the first place. Don't just think of the fate of Myspace and Netscape; think of Iomega and Sun Microsystems...)

Re: Republic – Now everyone can invest in startups

#58

Post by leesalminen »

mdorazio wrote: post #25
leesalminen wrote: post #14

Earlier quoted context omitted.

> I would also be skeptical of the potential of a startup that can't convince normal VCs to fund them. If people who do this for a living don't think a startup is worth investing in, why should I? There are plenty of SaaS companies that are naturally limited in revenue potential. In my experience, VCs are not interested in a company with a conservative forecast of 10MM ARR in 5 years. These are still viable businesse…

How is an investor in such a company supposed to actually get a return? Unless the company is paying dividends or something similar, the only payout comes from selling your shares or if the company is acquired at a premium. But who is going to buy these companies with a conservative "slow and steady" growth rate and market share?

For small-cap companies, debt instruments can be a perfect way to raise capital. Investors hold a promissory note promising to re-pay the capital loaned, with interest, over a specified period of time.

Re: Republic – Now everyone can invest in startups

#59

Post by tormeh »

jliptzin wrote: post #34
Animats wrote: post #30

Interesting. These appear to be JOBS act short-form mini-IPOs.[1] That's something new, which just became possible this year and hasn't been used much. Here's Farm from a Box's SEC filing.[2] Typical crappy terms - no voting rights, no anti-dilution, no transferability for one year, insiders have control. Nobody associated with the project has a farming background. They have two employees. One is a liberal arts major…

Regardless of the terms, all of these companies appear to be just terrible investments.

That's my impression too. Some, like Cringle on Companisto, looks OK-ish, but most of it is crap. At worst it's "delightful" candy subscriptions and at best it's a slightly better implementation of something that already exists.

EDIT: Having just looked at Companisto's page I now get lots of advertisements all over the web from them. So that's why no good start-ups bother with crowd-investing - because the portals take a big fat cut and so the start-up effectively gets a lower valuation.

Re: Republic – Now everyone can invest in startups

#60

Post by leesalminen »

rlucas wrote: post #28
mdorazio wrote: post #25

Earlier quoted context omitted.

How is an investor in such a company supposed to actually get a return? Unless the company is paying dividends or something similar, the only payout comes from selling your shares or if the company is acquired at a premium. But who is going to buy these companies with a conservative "slow and steady" growth rate and market share?

There are lots of ways to get a return. I helped start Lighter Capital (originally "RevenueLoan"), which invests a lump sum that gets repaid as a percentage of revenue (like a royalty). That model, Revenue-Based Financing, is harder to game than dividends (management can and often does make profit "disappear" but rarely has any incentive to make revenue disappear). You can also have redemption rights or dividends. De…

Agreed 100%. Financial instruments are interesting- if you can dream up the structure, there's likely a (legal) way to make it work. After all, it's just a record in a database at this point :).
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