Note: Equity crowdfunding and Republic both turned four this year! To mark the occasion, our friends at KingsCrowd reached out to Republic CEO and co-founder Kendrick Nguyen to hear his thoughts on the future of startup investing. We wanted to share their piece with you today.
If you want the chance to ask Kendrick questions yourself, there’s still time to sign up for our webinar with him tomorrow, July 30th at 3 p.m. ET/noon PT. The webinar will be an hour long, and we’ll take questions from the audience throughout. You can register for free here.
KingsCrowd also rates every startup crowdfunding today using its proprietary algorithms. They’re the MorningStar of the private space. And if you’re interested in using their ratings to help you invest, click here.
Equity crowdfunding turned four back in May. And much has happened in its four-year (and counting) run. Investors have given more than $350 million to more than 1500 startup companies since 2016.
The total number of investors using crowdfunding platforms has skyrocketed as well. In 2016, only 61,000 investors participated in crowdfunding raises. Last year that number jumped to 265,000! And 80% of those were non accredited investors. Regulation Crowdfunding deals have democratized startup investing by giving so many everyday investors an opportunity that didn’t exist just four years ago.
This month Republic is also celebrating its fourth birthday. The crowdfunding platform has been there almost every step of the way as equity crowdfunding has grown and flourished. We reached out to Republic CEO and co-founder Kendrick Nguyen to get his take on the future of startup investing and hear about one of his favorite Republic success stories.
KingsCrowd: Republic has seen some major growth and new partnerships recently. What are you most proud of in Republic’s four years of operating?
Kendrick: I’m incredibly proud of how far we’ve come since our inception. We were founded by AngelList alumni who fought for the passage of the JOBS Act and our mission remains the same as it was in the beginning: to provide startups access to the capital they need to grow while allowing everyday people the opportunity to invest in private companies. Since then, our platform has grown into a robust ecosystem of private investing with more than 700,000 members. In addition to the retail platform, which funds early-stage startups with micro-investments from the general public, we now have a private capital arm that supports larger investments from accredited-only investors and a crypto advisory arm for blockchain projects. We’re also expanding into new verticals and asset classes. We recently acquired real estate investment platform Compound backed by Founders Fund and NEA, and Fig, a video game investment platform backed by Spark Capital and Greycroft. Most recently, we launched Republic Note, our own digital asset. To think of how far we’ve come in the last four years makes me very excited for the next four, and many more to come.
KingsCrowd: Equity crowdfunding has already disrupted the status quo for startup investing. Today there are over 40 platforms hosting startup deals of all kinds. The SEC is considering raising the Reg CF limit from $1.07 million to $5 million (among other updates). Do you see any major trends in the equity crowdfunding ecosystem?
Kendrick: So much has changed in the crowdfunding space since 2016, but mainly it’s the marked surge of investors active in space. People who have never invested before are now able to invest in companies they support with as little as $50. With crowdfunding comes a powerful connection between startups and investors, and that leads to the support of the smaller companies. Some industries have undoubtedly seen an uptick in interest and investment volume, from real estate to video games to plant-based foods. We’ve also seen more founders turn to crowdfunding as part of their fundraising strategy or purely as a marketing, engagement, or mission initiative. Republic specifically saw a 42% increase in investments made on our platform over the last two months and added over 75,000 new users.
KingsCrowd: With so many exciting things happening at Republic, where do you hope to be this time next year?
Kendrick: The future holds many things for Republic as we are looking to become the “Amazon of private investing.” With our recent acquisitions and the launch of our digital asset (Republic Note), we’re not holding back. In the near future, we will be hosting more Regulation A+ deals. Reg A+ allows companies to raise up to $50 million per year (also known as a “mini-IPO”) and will allow our community to invest in more mature private companies.
KingsCrowd: There’s a lot of risk and uncertainty surrounding startup investing. Can you give us an example of a success story that came out of equity crowdfunding on the Republic platform?
Kendrick: The legacy system doesn’t do a good job at funding founders from diverse backgrounds. Black-founded startups only receive around 1% of overall venture capital funding, according to Crunchbase. Women are also underrepresented, having received just 2.2% of venture funding in 2018, according to Fortune.
Since the beginning, we have built Republic with these problems in mind. As a result, more than half of all the startups which raised money on Republic were founded by individuals who are often overlooked by the traditional funding system. We believe this is an area of incredible untapped economic potential.
An incredible example of success is Fleeting — a platform that connects companies with reliable commercial truckers. Founded by Pierre Laguerre in 2018, Fleeting was the first-ever company with a Black male founder to have raised $1.07M in funding from non-accredited investors. Close to 5,000 Republic users invested in Fleeting, including Chamillionaire, who is partnered with Republic, and E-40. Chamillionaire and Republic’s partnership came from each of our strong desires to provide funding opportunities to founders of color. Fleeting’s campaign on Republic ended earlier this month.
A hearty congratulations and happy birthday to Republic from KingsCrowd! We appreciated hearing from Kendrick and getting his insight into the space.