Startups
How to research startups
Until ten years ago, startup equity was out of reach for most Americans. That all changed in 2016, when Regulation Crowdfunding (Reg CF) took effect and opened up new possibilities for smaller investors.
Today, there are hundreds of startup deals available to investors through proven platforms like Republic. More and more issuers are entering the Regulation Crowdfunding space due to the increased raise limit— issuers can raise up to $5 million per 12 month period.
Startup investing, and private investing in general, is finally going mainstream. If you’re new to startup investing, new to Republic, or just curious, we want to help you to be prepared to invest. In this article, we’ll walk you through how to research and evaluate startup deals.
Start with the deal page
To invest in a startup, you’ll need to use a licensed platform like Republic. We choose companies that meet our standards, provide a clean, intuitive interface, and handle payments and other details. We also provide information on the deal page to help you streamline your research process.
Each deal page is designed to help you learn about a company, their product, and the investment terms (such as the minimum investment amount). Here are some important features to look for when you’re exploring Republic’s deal pages:
A summary and highlights
The problem the company is solving
How their product addresses the problem
Their proven success, also called traction
A business model overview
Relevant market/industry context, as well as their competition
Company founders and vision
As a potential investor, you can use all of this information to make an informed decision and to inspire further research. For more suggestions on how to evaluate deal fundamentals, see our article: Evaluating traction, team, and product.
Don’t overlook the Discussion section when exploring a deal page, where investors can ask the founders questions and read their responses. This is a valuable opportunity to get to know the founders, see how they interact with potential investors, and ask any questions you might have.
Under Documents you’ll find the company’s Form C, which contains financial information such as revenue and cash on hand. It’s important to know that the information found in Form C may not be fully up-to-date: it’s only a snapshot of the company’s finances at the time of filing. If something changes materially, companies are required to update their Form C and provide notice to investors.
This section also contains a link to the company’s security instrument (in this case, a Crowd SAFE), which contains all the details of the investment terms. Since it’s a legal document it’s not exactly light reading; so, there is a summary of the terms on the deal page to act as a guide for potential investors.
Republic’s deal pages are an invaluable tool for investment research, where we strive to provide the information you need to make an informed decision. Now that you have a general idea of how deal pages work, the best way to get to know them better is to explore our catalog of current deals.
Additional online research
Investment research starts at the deal page, but it doesn’t have to end there. If you have unanswered questions and want to find out more about the company, these online tools can help you find what you’re looking for.
First, use Google to search for reviews or discussions of the company’s product. You can also find helpful information on Youtube, Twitter, Facebook, or Reddit, which often have informal discussions of new and up-and-coming products. In the same way, you can easily see what the company’s competitors are up to.
It’s also worth looking at a company’s social media accounts, which can say a great deal about their image and how they interact with customers. However, it’s not unusual for an early-stage company to be a little light in their social media presence. If there isn’t much going on there yet, that’s not necessarily a bad sign.
If the deal is in an industry that you’re not familiar with, consider brushing up on your knowledge with some online research. After getting some background from the deal page, you can search Google News to find out what else is happening in the market.
Lastly, don’t underestimate the value of friends or acquaintances who are knowledgeable about the industry. Ask them what they think of the deal. They might bring a long-term perspective with personal insights that you can’t find online.
Browse our current offerings
The startup investment landscape has changed, and millions of investors are taking advantage of unprecedented access. If you want to join them, you can now invest in carefully vetted deals on Republic starting from $100. We’ll handle the details, and provide you with the tools and information you need to make an informed investment.
Whether or not you’re ready to start investing, Republic is here to help. Take your time exploring our deal pages, and find answers to your questions in our FAQ. The more deals you evaluate, the more you’ll understand how it all works.
When you’re ready, it’s never been this easy or affordable to get started.