Note: We’ve prepared the following section as an excerpt from our full risk disclosures for your convenience.
Crowdfunding investments are risky and speculative. You should do your own research and scrutinize all disclosed risk factors before making an investment decision.
Speculative. Investments in startups, early-stage ventures and emerging technology companies are speculative and these enterprises often fail. Unlike an investment in a mature business, where there is a track record of revenue and income, the success of a startup, early-stage venture or emerging technology company often relies on the development of a new product or service that may or may not find a market. You should be prepared to lose your entire investment.
Illiquidity. Your ability to resell your investment in the first year will be restricted with narrow exceptions. You may need to hold your investment for an indefinite period of time. Unlike investing in companies listed on a stock exchange, where you can quickly and easily trade securities, you may have to locate an interested private buyer to resell your crowdfunded investment.
No voting rights. Investment instruments hosted on Republic are typically held via the Crowd SAFE, which does not provide voting rights to investors. Investors may receive voting rights if that instrument converts to stock, but crowdfunding investors’ voting rights will mostly likely be diluted when as the company raises additional funds. In addition, crypto-assets typically do not have voting rights and owning a token will not give you influence over the token maker or seller.
Cancellation restrictions. Once you make an investment, you can cancel the investment at any time and for any reason up to 48 hours before the campaign deadline. Some campaigns may have multiple deadlines around rolling closes. Investors should pay attention to notices companies provide regarding rolling closes. Learn more.
Valuation and capitalization. No exchange or other secondary market is expected for securities sold under Regulation CF. Companies fundraising via Regulation CF are often early-stage startups and are unlikely to have substantial operating or financial histories. There is limited–if any–information for valuing securities offered through Republic and there is a substantial risk that the price of securities purchased on Republic may exceed their value and any amount for which they may eventually be resold. Furthermore, securities sold on Republic may provide investors with inferior terms than similar securities provided by a company in other offerings.
Limited disclosure. The company must disclose information about itself, its business plan, the offering, and its anticipated use of proceeds, among other things. It’s important to note that an early-stage company may be able to provide only limited information about its business plan and operations because it is still developing its operations. The company is also only obligated to file information regarding its business annually, including financial statements.
Under certain circumstances the company may cease to publish annual reports and investors may have no information rights.
Investment in personnel. An investment in a startup, early-stage venture or emerging technology company is also an investment in the founding entrepreneur(s) and/or the company’s management. Being able to execute on the business plan is an important factor in determining whether the business will be viable and successful. A portion of each investment may be used to fund salaries. Investors should carefully review any disclosure regarding the company’s use of funds.
Possibility of fraud. There is a risk that a company raising on Republic engages in fraud. Republic vets the companies we host, but there is no way to control the actions of a company once a campaign ends and Republic cannot verify everything.
Lack of professional guidance. Many successful companies partially attribute their early success to the guidance of professional early-stage investors (e.g. angel investors and venture capital firms). These investors often negotiate for seats on the company’s board of directors and play an important role in providing additional resources, contacts and experience in assisting early-stage companies in executing on their business plans. An early-stage company primarily financed through crowdfunding may not have the benefit of such professional investors.
Again, please be sure to review more extensive Risk Factors here.
Republic Core LLC (“Core”) provides technology and support services to OpenDeal Inc. and its affiliates (collectively, the “Republic Ecosystem”). Republic Note holders and as well as users of the site and services maintained by the Republic Ecosystem, regardless of and their activities on or relating to the Republic Ecosystem, are subject to the applicable terms of service, in their entirety.
Core is currently conducting an offering of Republic Notes under Rule 506(c) of Regulation D under the Securities Act of 1933, as amended (the “Securities Act”) to persons who are accredited investors, as that term is defined in Rule 501. Only accredited investors are eligible to participate in the Rule 506(c) offering. Accredited investors who wish to participate in the Rule 506(c) offering should receive and review carefully the Private Placement Memorandum pertaining to that offering, as it contains important information for potential investors to consider prior to making an investment decision. Accredited investors who wish to participate in the Rule 506(c) offering will be required to (i) complete a subscription agreement, (ii) acknowledge that they have received and read the Private Placement Memorandum, and (iii) provide information verifying their status as accredited investors.
Core is also “testing the waters” with respect to the sale of Republic Notes under Regulation A of the Securities Act. The “testing the waters” process allows companies to determine whether there may be interest in an eventual offering of its securities to qualified purchasers under Regulation A. Core is not under any obligation to make an offering under Regulation A. No money or other consideration is being solicited for an offering under Regulation A at this time and, if sent, it will not be accepted.
Core may choose to make an offering to some, but not all, of the people who indicate an interest in investing, and that offering may or may not be made under Regulation A. For example, Core may choose to proceed with its offering under Rule 506(c) without ever conducting a Regulation A offering, in which case only accredited investors within the meaning of Rule 501 will be able to buy Republic Notes.
If and when Core conducts an offering under Regulation A of the Act, it will do so only once (i) it has filed an offering statement with the Securities and Exchange Commission (“SEC”), (ii) the SEC has qualified such offering statement and (iii) investors have subscribed to the offering in the manner provided for in the offering statement. The information in the offering statement will be more complete than any test-the-waters materials and could differ in important ways. Prospective investors who are interested in participating in the Regulation A offering must read the offering statement filed with the SEC, when that offering statement becomes publicly available.
No money or other consideration is being solicited at this time in connection with any potential Regulation A offering and, if tendered, will not be accepted. No offer to buy securities in a Regulation A offering can be accepted and no part of the purchase price can be received until an offering statement is qualified with the SEC. Any offer to buy securities may be withdrawn or revoked, without obligation or commitment of any kind, at any time before notice of its acceptance is given after the qualification date. Any indication of interest in Core’s offering involves no obligation or commitment of any kind.