Private startup investing has always been inaccessible to the general public due to some laws and regulations passed by the U.S Security Exchange Commission (SEC). Previously, private companies and startups’ investments were only reserved for investors with a high net worth or investment firms.
Thanks to recent changes in such laws, anyone who is 18 or older can now invest in any startup of their choice.
However, the high failure rate of most startups makes an investor’s Return on Investment (ROI) unstable. These problems are what Republic aims to solve, by bringing the best investment opportunities to everyone.
In this article, you will learn about Republic, how its ecosystem works, and the various use cases of its utility token.
What is Republic?
Republic is a regulated investment platform that allows anyone to invest in any startup of their choice. It was founded in 2016 and backed by AngelList, Binance, and Algorand Foundation.
The Republic platform is divided into two: a public investment platform for retail investors (“Republic Crowd Invest”) and a private investment platform (“Republic Private Capital”) for accredited investors only.
On the Republic Crowd Invest platform, users access early-stage startups, growth-stage/pre-IPO technology companies, e-sports and video games, real estate, and Main Street investments. In addition, users can also invest in blockchain and crypto projects.
The minimum investment into any of the projects varies and depends on the companies.
Since its successful launch in July 2016, Republic Crowd-Invest has hosted more than 160 startups, facilitated 140,000 investments, and built a worldwide community of hundreds of thousands of active retail investors.
Each investor on the platform is entitled to a share in the revenue/profit generated from the investment platforms when partnering companies – past, present, future – go public or get acquired.
According to Republic, they will payout dividends periodically to Republic Note holders in the form of stablecoins if and when the proceeds from the exits reach a threshold amount of $2m. Republic Note is Republic’s native token and powers the investments.
Popularly referred to as the “profit-sharing token”, Republic Note is built on the Algorand blockchain. Algorand is a next-generation Blockchain with low transaction fees and relatively high throughput making it an ideal protocol for the project.
Currently, there’s no market for Republic Note tokens, and it has a capped supply of 800 million.
Republic Use Case: Profit Sharing in the Republic Ecosystem
As you might know, profit sharing is one of the primary goals of many projects in the blockchain space. For example, Binance buys back and burns BNB quarterly based on a percentage of revenue, limiting the supply of BNB and keeping the value up. Compound, another project shares its profit by “giving out” a stake in its native token COMP.
Republic Note allows users to also benefit from this profit-sharing initiative by just holding the token. Having the token enables investors to own a piece of profits from selected Republic companies and startups distributed at the Republic’s discretion.
According to Republic, “each Republic Note represents a fractional right to our profit distributions when certain conditions are met.” This feature is possible because all company revenue flows into a holding company called Republic Core.
Republic Note holders do not have direct legal ownership rights to the underlying companies that raise capital on or through Republic’s investment platforms. However, they will receive their portions of the Core Proceeds.
Republic Use Case: Private Equity Investments
The second use case of Republic Note is that the token allows small-time retail investors to invest early in startups and companies still yet to go public. Recent findings show that global private equity net asset value has grown 7.5% since 2002, more than double the public markets.
Despite this progress, 92% of American households still don’t have access to private investments. Republic Note offers anyone access to these kinds of investments, and investing in startups on Republic is simple.
Company registers on Republic’s crowdfunding and private capital platforms after meeting Republic’s criteria. Interested investors also register and pay cash for equity in the ecosystem in the form of Republic Note tokens.
By investing and holding Republic Note, every investor is entitled to the benefits accrued as an investor.
While investing in such startups, it is essential to note that your investment won’t be transferable for 12 months and may not have a resale market.
Republic Use Case: Startup Crowdfunding
Republic Note is used in raising funds for startups on the Republic platform. An example of this is Crowd SAFE, which is Republic’s variation of Y combinator’s SAFE (Simple Agreement for Future Equity) specifically for crowdfunding.
With Crowd SAFE, any company can fundraise on Republic by giving out equity stakes to Republic Note holders/investors for a particular period. This is a new approach to crowdfunding adopted by Republic, allowing Republic Note users to invest in any company in exchange for a slice of profits distributed in fiat or crypto assets.
What Does the Future Hold for Republic?
Like any blockchain project disrupting financial services, the future seems bright for Republic. The project brings a fresh and exciting twist to the crowdfunding and angel investing industry.
It is transforming and simplifying the startup investment and venture capital ecosystem and could set the pace for a new way to invest in new projects for everyday people.
As investors continually enjoy the benefits of holding the Republic Note token and the Core proceeds being distributed, more investors will be attracted to take part in the platform This could further lead to more adoption and awareness of the project.