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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

#71

Post by justinlardinois »

I can see this having all the same problems Kickstarter has with video games:

- A bunch of people whose only experience with the industry is as consumers, with no real knowledge of how investing or the field they're investing in works

- Companies that have little more than an idea and big promises, lacking the skill, manpower, and knowledge of how to see a product through from conception to release (plus a lack of knowledge on how to obtain those things)

- Companies that stop updating and eventually just run off with the money

- People who think they're entitled to a refund if what they invested in fails

Will "Angel Investor at Republic" overtake "CEO and Founder at Company That Is Literally Just A Facebook Page" as the job title of choice for wannabe tech bros?

Re: Republic – Now everyone can invest in startups

#72

Post by Animats »

tuna-piano wrote: post #52
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 we…

No, what's happened is that low interest rates have made borrowing, or investment with borrowed capital (which is what much "private equity" really is) more attractive than going public. That's why we have overvalued "unicorns". If Uber went public, they'd have a far lower market cap than their current valuation.

This also has a lot to do with the tax advantages of debt.

Re: Republic – Now everyone can invest in startups

#73

Post by prance »

pmen wrote: post #55
Animats wrote: post #54

Earlier quoted context omitted.

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.

Actually, both Apple and Orange are public companies :D

Re: Republic – Now everyone can invest in startups

#74

Post by prance »

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.

pmen is right. We considered crowd investments for our own startup, and concluded it's too much work, hassle and inflexibility. Republic's model seems to mitigate this somewhat, but (probably?) only works in the US and even they state on their site:

"The tradeoff for the benefits of investment crowdfunding is the complex regulatory requirements that companies must follow. The general spirit of the law is simple: companies should provide complete and accurate information so that the public can make informed investment decisions. Incorrect or misleading information comes with severe legal consequences. In addition to the following, you should also consult your attorneys and accountants to ensure full compliance with all legal and accounting requirements. Republic as a funding portal is not authorized to and does not provide legal, accounting or investment advice."

Sounds like it could very well still be too much for us.

Re: Republic – Now everyone can invest in startups

#75

Post by astrange »

minton wrote: post #32

How is this different than wefunder.com?

This really does seem the same. Actually, I invested in one there just so say I could.

But there's some weird things on this site:

- there's something called investment clubs where you can recommend companies to nearly-passive investors and get 10% of something out of it. But there's no inventory on this site either so why are they being paid for no work? I'm sure I could guess every investment just from the name of their club and skip the middleman.

- several companies are just selling you bonds ("revenue share" and "loan money"). Seems strictly worse than buying some regular bonds, and why does a startup want to return capital anyway?

Re: Republic – Now everyone can invest in startups

#78

Post by homero »

twblalock wrote: post #3

You don't get shares if you invest -- you get something called a "crowd safe": https://republic.co/learn/investors/crowdsafe More info here: http://www.crowdfundinsider.com/2016/06/87034-republic-adds-... I'm a bit leery of these. According to the article, "unless specifically negotiated, SAFE holders do not have any voting or information rights." I also suspect that the shareholders get taken care of before crowd sa…

The safe word, great for lawsuits when all the investors lose everything

Re: Republic – Now everyone can invest in startups

#80

Post by krisdol »

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…

I imagine there are very few good startups that would offer the general public voting rights in early stages without first being able to vet those investors.
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