When it comes to investing, diversification is an integral part of any portfolio. This is because having investments in different asset classes helps reduce your risk of putting all of your eggs in one basket, which can be particularly important if you’re holding a variety of securities, each with its level of liquidity.
While it’s possible to diversify your portfolio and holdings across things like stocks, bonds, mutual funds, and ETFs, accredited investors have access to a broader range of asset classes than everyday investors. Part of this has to do with cash flow since an accredited investor has a high net worth and income of over $200,000 annually, allowing them to take on more high-risk investment opportunities like investing in venture capital and real estate. That being said, there are perks to these sorts of investments that investors can reap — if they are qualified to make these investment decisions, too. This is where equity crowdfunding platforms like Republic.co come in.
Republic.co is one of many crowdfunding platforms in recent years to offer non-accredited investors the opportunity to get into investing in startups and real estate. Equity crowdfunding is thus catching on with startups looking to boost their fundraising efforts since regulation crowdfunding can also generate buzz about a company in a similar way to social media.
Is Republic.co the right investment platform for you? Read this review to learn the pros and cons of the crowd-investing platform, along with what features will be most beneficial to you.
Republic.co is a crowdfunding investment platform that connects individual and institutional investors to different investment opportunities. From startups and real estate to crypto and videogames, Republic.co has helped over a million users invest over $150 million in the past year alone.
Republic was co-founded by Kendrick Nguyen and Paul Menchov in 2018, who both bring considerable experience to the table as co-founders. Before starting Republic, Nguyen was General Counsel at AngelList, the largest online private investment company, while Menchov served as the Head of Fundraising Infrastructure at AngelList and co-founded CoinList. Together, they envisioned a platform that democratized fundraising by letting anyone interested in equity investing get a piece of the pie.
To date, Republic.co has served as a funding portal for pre-IPO companies and startups crowdfunding via A, CF, and D funding campaigns.
One thing that differentiates Republic from other crowdfunding investment platforms is its trademarked Crowd SAFE (Simple Agreement for Future Equity). Crowd SAFE has the most impact on startups looking to fundraise through the platform since, in effect, it makes it so that every investor through Republic (sometimes hundreds) is represented as one line item on their cap sheet.
As an investor, what this means to you is that your name will never appear on a cap sheet, even during a liquidation event. It also means that you won’t be able to convert your investment unless there’s a liquidity event, such as a change of control, IPO, or acquisition. To put it another way, you can think of Crowd SAFE as a convertible note for the founders of any startup using Republic’s crowdfunding platform to raise funds, except that it doesn’t have an interest or a maturity date.
To get started with Republic, all you need to do is sign up for an account. The team behind the platform has worked hard to ensure that the signup and investing process with Republic is as streamlined and straightforward as possible. They want to make investing in equities (a historically tedious process involving lawyers and thousands of dollars) as simple as shopping online, and they’ve accomplished that goal.
If you’d like, you can sign up for Republic with an existing Facebook or Twitter account. However, if you don't want to connect your social media account to your Republic account, you can always sign up using an email address, too — it’ll just take a few more steps.
When you sign up with your email address, you’ll need to provide your first and last name as well as a password for your account. From there, you’ll read and answer a few questions to help you understand the risks and limitations associated with crowdfunding. While this section can feel a bit daunting, Republic’s provided many learning materials to explain further how and why they operate the way they do.
It’s worth remembering that many of these facts are valid if you open an online brokerage account at TD Ameritrade or Vanguard, too; however, Republic is much more transparent in where and how they explain these facts to you.
Although investing in startups is high risk, and there are limitations on when and how to sell your securities, Republic.com walks you through diversification strategies. You have the right to cancel an investment up to 48 hours before the deal deadline, and it explains your investing limits, depending on your net worth, if you’re not an accredited investor.
Next, you'll be invited to share some information about yourself so that companies and investors can get a feel for who you are, what you look like, and what sorts of investments you’re hoping to make on the platform.
After you’ve completed that portion, you can get started investing! If you’ve ever used a crowdfunding platform like Kickstarter or IndieGoGo, then you’ll be very familiar with the user interface, and the way information is displayed on Republic.
When you click on a specific company to invest in, you’ll be able to learn how much money they’ve raised to date, the number of investors who’ve contributed to the fundraising campaign, the number of days left to invest, and the minimum amount required to invest. Companies can also share a wealth of information about their business model and projects, including their pitch, valuation, highlights about the company, what problem they’re trying to solve, and how they’re going to solve it. All of this information can be useful for determining which companies you’re most interested in supporting and how they match up with your values as an investor.
How much does Republic.co cost?
Republic.co charges its investors nothing to use its service. Instead, they make money based on taking a percentage of what startups raise on their platform. This means that aside from contributing the minimum amount to make an investment — which can range between $20 and $250 depending on the business — you won’t spend a penny to use Republic.co as an investor.
If you don’t want to be actively involved in investing with Republic, you don’t have to be. With their Autopilot functionality, you can set your monthly contribution limit and “set it and forget it.” This hands-off approach also enables you to access lower minimums on some investments, with a few companies letting you invest for as little as $20. The service is customizable to your preferences, so you can opt-out of any startup you’d prefer not to support. It’s also completely free.
Vetting and due diligence
With such a high-risk asset class, you mustn’t throw your money at any old company. This is why Republic has a vetting and due diligence process, which ensures that you have the cream of the crop when it comes to your options as an investor. Companies applying to fundraise on Republic are carefully screened and evaluated based on their founders, product, traction, and mission.
Once passing this phase, a company is subject to Republic’s due diligence process. This includes verifying information about the company and performing independent research that seeks to get to the core of the company’s business model, market, team, terms, and runway, among other factors.
Finally, the company is evaluated by Republic’s team of experts, which comprises individuals with experience working with companies like Merrill Lynch, Facebook, Google, and Blackrock, to name a few. From thousands of applications, only about 5% are accepted to Republic’s platform, meaning that you can have some peace of mind when it comes to investing with their platform.
If it wasn’t apparent from the registration process, it’s incredibly easy to register for an account on Republic. Beyond that, the user interface is straightforward, readable, and easy to navigate. Minimum investment amounts are pretty transparent and readily displayed, and you don’t have to go digging to get any information about the companies you’re evaluating or Republic itself. With a robust knowledge network and FAQ series, you can learn a lot about equity investing on Republic’s website even if you don’t wind up using their platform to invest.
Who is Republic.co best for?
If you’re not accredited as an investor, Republic makes it possible to invest in startups and real estate without having to meet net worth or income requirements. Since that’s roughly 97% of the population, it’s safe to say that Republic has broad appeal to investors looking to diversify their portfolios or align their values as a consumer and investor with their investing strategies.
Investors with limited capital
Unlike other crowdfunding investment platforms, Republic has low minimums for most of its investments. This affordability means anyone who wants to invest on Republic can likely do so, with minimums starting at just $20 for some businesses. Republic doesn’t charge extra fees on top of the investments you make is another central point for budget-conscious investors.
Who shouldn’t use Republic.co?
People without a healthy appetite for risk
Investing in startups is one of the most high-risk types of investing you can do. As such, it’s a good idea to avoid investing with Republic if you can’t afford to lose money on your investments. Remember that you should only ever invest money that’s expendable to you, not money you need to pay back lenders or cover housing and utility costs. This is particularly true if you’re considering investing in blockchain technologies like cryptocurrencies on Republic, which are unregulated and can fluctuate in price dramatically. (See Elon Musk and Dogecoin for an illustration of this fact).
While you can undoubtedly use Republic to invest as an accredited investor, generally speaking, you’ll find better companies and investments available to you through a more traditional brokerage. That isn’t to say that Republic’s endorsements aren’t going to be helpful if you’re interested in the sorts of companies they support on their platform, but if you’re already an accredited investor a financial planner or wealth advisor will outclass a service like Republic.
Simple. One of the biggest draws to Republic compared to other options on the market is how intuitive it is to use. If you’ve shopped online and are comfortable navigating a website or your smartphone, you’ll have no problem investing with Republic.
Vetted. The fact that Republic only lets 5% of applicants fundraise through its platform makes it less risky than blindly picking startups without first doing a lot of research into the companies. The due diligence process at Republic is multi-tiered to ensure that only businesses with a strategy, vision, and real leadership can fundraise through the platform.
- Low minimums and no fees. Compared to other crowdfunding investment platforms, Republic is super affordable. With no fees for account maintenance or on a per investment basis, you’re able to keep more of the money you earn investing on Republic. Additionally, you can invest in some companies for as little as $20, which goes a long way in making equity investing more accessible.
Risky. As has been mentioned frequently, investing in startups is highly risky. Republic says this themselves during the account creation process. They reiterate it throughout their help materials and FAQs. This isn’t to say that you shouldn’t invest in startups; however, you need to do so responsibly and understand that there is a definite chance you will lose money doing so some of the time.
Low liquidity. Since it’s not possible to cash out until a liquidity event, you may have to wait for a while before you can reap the rewards of your investment. Generally speaking, you can expect to be able to do this in at least five years; however, if an acquisition or change in leadership happens earlier, you may qualify to sell earlier.
Limitations. If you’re not an accredited investor, you can’t put a ton of money into your startup portfolio, even if you’d like to. Generally, your investments into equities as an individual investor with no accreditation are capped at $2,200 a year, although depending on your income you may qualify to invest at a higher limit. As such, there are other types of securities that may be a better choice to invest in if you have the money to do so.
Republic.co vs. competitors
Republic.co isn’t the only option to consider if you want to get into equity investing. Learn more about how Republic compares to two of its competitors, SeedInvest and AngelList, below.
Completely free for investors
2% per investment
2% management, 20% carry
Accredited or Non-Accredited Investors
Minimum to open an account
$10, most companies have minimum investment amount of $20-$250
$1,000 for deal-by-deal
SeedInvest is another option for crowdfunded equity investing that allows for accredited and non-accredited investors. SeedInvest does take a 2% fee (capped at $300) for every investment made on its platform to handle account maintenance. Compared to Republic’s free-of-charge services, that may be a dealbreaker to some. Still, SeedInvest’s due diligence and vetting process is even more rigorous than Republic’s and results in only 2% of companies being able to fundraise on their platform so that you may have a bit more peace of mind with the higher standards.
AngelList made its name as the most comprehensive online platform for startup investing; however, it’s exclusive to accredited investors. As such, you won’t be able to use AngelList if you don’t meet specific accreditation requirements. That being said, some companies that AngelList supports go through other rounds of funding with Republic, so you may still be able to access some AngelList-endorsed businesses as non-accredited investors using Republic.
How do you make money investing in startups?
Any investment in a company involves obtaining a Crowd SAFE, entitling you to a financial interest in the company. If the company goes public or is acquired at a price that’s higher than the price you bought in at, you turn a profit.
Is Republic.co secure?
Yes. As a financial institution, Republic has to follow standards for both data security and privacy, which it does to protect its users—whether they’re investors or are the businesses fundraising on its platform.
Do you get voting rights in a company when investing through Republic?
More often than not, no. This depends on the way that the company chooses to fundraise through Republic. However, even in cases where you might get voting rights, they’ll likely be quite diluted by other crowdfunding investors. They can be diluted even more if the company enters another round of funding.
The bottom line
Investing in equities and startups can be incredibly risky. Still, there’s a reward to be had if you have the expendable income to get involved even as a non-accredited investor. If you are interested in getting involved in this type of investing, Republic is a great platform to use. Its sleek user interface, ample support resources, and extensive knowledge base ensure that you’re learning as much as possible about the venue and type of investments you’re making before you ever hand over your bank information.
For more casual investors who are just starting, it may be a safer bet to stick with stocks, ETFs, and mutual funds if you need a reliable and consistent return on your investment. While the barrier to entry is undoubtedly relatively low from an expense perspective, with high risk and low liquidity, there are some serious cons to consider as you consider investing with Republic.
Even so, for the curious or adventurous investors out there who want to be on the cutting edge and don’t believe that the wealthy should be the only ones able to decide the fate of a company or startup, Republic is an ideal platform to use. With low minimums and an easy-to-understand, transparent user interface, the investing platform is a great way to get involved in venture capital work — even if you only want to toss $500 into the ring.