The crowdfunding model in crypto is far from dead, as Republic illustrates with a compliant profit-sharing token that distributes the proceeds from successful equity investments.
The crypto industry has long been a testing ground for crowdfunding initiatives. Although previous models, such as the Initial Coin Offering (ICO) and Initial Exchange Offering (IEO) have attracted regulatory scrutiny (and occasional founders with questionable motives), some companies refuse to give up on the idea that crypto and crowdfunding are compatible.
One such platform is Republic, which is using its Republic Core technology to offer accredited investors the opportunity to share in the profits derived from its own portfolio of startups when (and if) the companies in which it invests succeed.
Virtuous circle investing
The Republic Note is the vessel for this unusual model, which aims to create a virtuous circle for investors — a successful equity investment by the Republic crowdfunding platform leads to dividends, interest or a liquidity event, which is then shared among Republic Note token holders, who may then be tempted to invest in future equity offerings.
Republic maintains both a private placement platform for accredited investors, and a public crowdfunding platform open to everyone with a minimum of $20 to invest. Each platform pays a portion of generated revenue above a threshold back to Republic Core, which then distributes it to Republic Note holders.
Republic co-founder Kendrick Nguyen told Cointelegraph that “92.5% of U.S. citizens are locked out of the best deals of our time, like early Facebook and Google. The best deals are traditionally only accessible through private investing. In fact, global private equity has grown twice as fast as the public markets over the last 20 years. The Republic platform solves this problem by using our expertise and network to identify some of the most promising startups and private equities and open them up to investors who would otherwise not have access.”
Perhaps the diligence of the solution is unsurprising, given that Nguyen himself used to be General Counsel at AngelList, and that Naval Ravikant is an advisor to the business.
“Ultimately we have always been interested in pushing the innovation limits of private investing,” explained Nguyen. “We have moved into new verticals like real estate and gaming, offered cutting edge products, and the Republic Note, the profit-sharing digital security is the next big leap.”
Over $10 million committed in 5 days
So far over 6,000 participants have either directly invested in the Republic Note, or expressed an interest which qualifies non-accredited investors to add their names to a list of people interested in funding potential Regulation A+ offerings. This form of equity crowdfunding is exempt from SEC regulation regarding accreditation, and the list is capped at $5M in expressed interest.
Pantera Capital’s Paul Veradittakit suggested that “Republic not only lowers the barrier for folks to invest but also gives them a piece of the underlying profits of the platform. Imagine now being able to invest in the equity of Republic… but have it be liquid, being incentivized to support, promote, and use the product. It’s a great way to enhance network effect and engagement.”
Overall, Republic has already facilitated investments worth over $150 million in over 200 startups and private equities, including current offerings such as Zephyr Aerospace, which is seeking to build a lie-flat, social-distancing-compliant airline seat for Economy Class travelers, and Nada — a platform for buying and selling homes at potentially no cost. It focuses on mission-driven startups and clearly identifies and celebrates minority-owned businesses, offering encouragement to diverse teams which, it contends, may build the next unicorn “where the masses aren’t looking.”
Veradittakit concluded that “Republic has been able to piggyback off the crowdfunding trend, and add in the ethos of the blockchain ecosystem.”
In addition to the commitments from everyday investors, the Republic Note has been backed by Binance Labs, Blockchain.com Ventures, Algorand (on whose network the Republic Note token runs) and multiple other crypto-focused investment funds.