Republic is an equity crowdfunding company. Be informed that besides the fees charged by Republic, there are additional costs associated with equity crowdfunding and is not suitable for small startups.
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| Total Rating | 4.0 |
|---|---|
| Terms & Fees | Good |
| Application Process | Good |
| Sales & Advertising Transparency | Good |
| Customer Service | Good |
| User Reviews | Good |
Table of Contents
Republic is one of the pioneering companies in the new world of open-to-all equity crowdfunding. Does their approach suit your crowdfunding needs?
While regulation crowdfunding has been slower to catch on than was hoped, the last few years have seen the industry start to realize its potential.
Enter Republic. Taking advantage of the legalization of equity crowdfunding for any and all investors, Republic states its mission to provide investors access to “highly-vetted investment opportunities in startups, real estate, video games, and crypto.” With its focus on directing investments to companies with very high growth potential, Republic’s brand of equity crowdfunding isn’t for the mom-and-pop hardware store down the street.
Read on to see how Republic’s conception of investor-fueled equity crowdfunding works.
Republic is a platform on which US-based C-Corporations, LLCs, and PBCs can raise up to $1.07 million over a (maximum) 12-month period (up to a maximum of $5 million total) from registered investors. Most companies crowdfunding on Republic use a financial instrument known as a Crowd SAFE. In Republic’s words:
A Crowd SAFE is an investment contract between investors and companies looking to raise capital. Individuals make investments for the chance to earn a return—in the form of equity in the company or a cash payout—if the company is acquired, goes public, or sells all of its assets.
According to data on its front page, Republic claims to have generated over $1.5 billion in investments since 2016 with over 600 deals being done.
According to Republic, the due diligence process for applying companies should take no longer than 5 business days. Regarding individuals who are ineligible to use Republic, the company details who it considers to be “bad actors” on its website. The aforementioned page also details exactly which individuals are subject to this scrutiny.
Potential companies will need to pass a three-step process before they can raise funds on Republic. This process will consider factors such as the company’s founders, its product, mission, proven traction, business model, social impact, and more.
This application phase is very competitive: According to Republic, less than 5% of applicants are accepted to raise money on the platform.
These are the terms and fees for Republic’s equity crowdfunding campaigns:
| Funding Duration Limit: | Most Republic campaigns last 60-120 days (a longer duration may be available on a case-by-case basis) |
| Republic Platform Fee: | 6% of the funds raised in cash plus 2% as a Crowd SAFE |
| Payment Processing Fee: | ~2.5% for payments made via credit card |
| Funding Type: | All-or-nothing |
Along with the fees charged by Republic, there are additional costs associated with equity crowdfunding. Filling out a Form C is a legal requirement for equity crowdfunding, and getting help in completing this form can cost about $1,500. Another legal requirement for companies is that they have an escrow agent — this can cost another $1,500. Furthermore, Republic offers a service through a partner in which an attorney both files your Form C and helps you with other legal aspects of your campaign for $1,500.
With all crowdfunding, but particularly with equity crowdfunding, you have to spend money to raise money.
It should be noted that a company raising money on Republic can offer rewards to backers in addition to equity.
If your company meets Republic’s three core criteria and is not comprised of any “bad actors,” the company will consider the secondary factors previously mentioned “in a holistic manner.” Campaigners are expected to have a lawyer, an accountant, and a transfer agent. Republic doesn’t offer access to these professionals directly but will provide referrals if needed.
Equity crowdfunding certainly isn’t the simplest field to navigate, but Republic provides plenty of information about its services on the company website.
| Republic Support | Availability |
|---|---|
| Phone Support | |
| Email Support | |
| Support Tickets | |
| Live Chat | |
| Dedicated Support Representative | |
| Knowledge Base or Help Center | |
| Videos & Tutorials | |
| Company Blog | |
| Social Media |
Though the Republic team will obviously need to be in touch with you if you’re accepted onto their platform, the only way to contact them “cold” is via email or social media.
Criticism of Republic tends to focus on the inherent “high risk, low liquidity” nature of equity investment, along with the fact that investments remain locked up for one year before the investor can sell their shares. As for criticism of the company from the perspective of businesses seeking investment, reviewers used to point to the relatively small amount of investment attracted by companies on the platform, but with the big jump in investments the company has seen over the past year or so, this is no longer the case.
A few reviewers have noted that compared with competitors like WeFunder, companies have to undergo stricter due diligence to use Republic. This may be a plus for investors, but not for companies seeking to use the service. Fees are also a bit higher with Republic than they are with some other equity crowdfunding sites.
Reviewers like the fact that people can invest as little as $50 in a company using Republic for crowdfunding. From the campaigner perspective, the fact that the company has been very successful in raising capital as of late has been noted by recent reviewers. Given that this is Republic’s entire purpose, this is no small compliment.
As an equity crowdfunding platform, Republic’s success in raising capital for promising startups had been rather limited. However, things have changed over the past few years, and the company now sees many more companies using its platform than it had previously. Combine that with the 90+% funding success rate of companies using the platform, and Republic’s value is clear.
Of course, the exclusive nature of Republic’s equity crowdfunding means that from the perspective of investment-hungry entrepreneurs and businesses, the appeal of Republic is still rather limited. However, we cannot ignore the investment boon Republic has seen recently, which is why we’re bringing the company’s score up to 4 stars out of 5.
While we hope Republic (and the equity crowdfunding landscape in general) evolves in a direction more broadly welcoming of small businesses, the company’s increasing success has been beneficial to the sort of firms and entrepreneurs prepared to take advantage of the tools on offer.
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