Republic – Now everyone can invest in startups • Hacker News Board

Republic – Now everyone can invest in startups

#1

Post by jrbedard » Fri, Sep 02, 2016, 6:14 PM UTC

Republic – Now everyone can invest in startups
republic.co

Re: Republic – Now everyone can invest in startups

#2

Post by agconti » Fri, Sep 02, 2016, 6:56 PM UTC

Startups as investments are very risky with long payoff horizons. With their limited funds, this is a poor investment for the average investor. I can't help but feel like this will hurt more people then it will help.

Re: Republic – Now everyone can invest in startups

#3

Post by twblalock » Fri, Sep 02, 2016, 6:58 PM UTC

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 safe holders in legal or bankruptcy proceedings. The rights of crowd safe holders haven't been tested in court.

I think the lack of rights and additional risk inherent in crowd safes would need to be compensated for by some kind of discount relative to what investors pay for shares. Otherwise, the risk-adjusted return is lower.

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?

Re: Republic – Now everyone can invest in startups

#4

Post by crypto5 » Fri, Sep 02, 2016, 7:01 PM UTC

agconti wrote: post #2

Startups as investments are very risky with long payoff horizons. With their limited funds, this is a poor investment for the average investor. I can't help but feel like this will hurt more people then it will help.

I think it is healthy strategy to dedicate 5-10% of investment portfolio to high risks investments like this, even for average investor.

Re: Republic – Now everyone can invest in startups

#5

Post by melvinmt » Fri, Sep 02, 2016, 7:04 PM UTC

oops, never mind :)

Re: Republic – Now everyone can invest in startups

#6

Post by tspike » Fri, Sep 02, 2016, 7:08 PM UTC

melvinmt wrote: post #5

oops, never mind :)

Wrong article.

Re: Republic – Now everyone can invest in startups

#7

Post by tspike » Fri, Sep 02, 2016, 7:10 PM UTC

The general counterargument to the "we're in a bubble" observation has been that it's all private equity, that people aren't risking their houses or 401(k)s on startups this time around. This would appear to be a move in that direction.

Re: Republic – Now everyone can invest in startups

#8

Post by jonpaine » Fri, Sep 02, 2016, 7:11 PM UTC

It appears that the Startup/issuer sets a static offering price [0]. When I envision how crowdsourced investing would reinvent this space, a huge component of the value added would be a degree of price-elasticity and feedback. It doesn't have to be a full-on auction, but getting the pricing right (for the issuer) seems like THE killer feature here... (thinking back to the concept of how Google priced their IPO )[1]. Offering a product that facilitated more innovative pricing structures at offering would be extremely compelling - and would greatly increase Republic.co's target market as well.

[0] https://republic.co/learn/issuers/how_it_works [1] http://www.wsj.com/articles/SB108328345314098183 (potential paywall)