Note: We’ve prepared the following section as an excerpt from our full risk disclosures for your convenience. Investments found on Republic are inherently 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, emerging technology companies funds and digital asset projects 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.
Crowd Term Notes and Crowd Revenue Notes also typically do not provide voting rights (see here). 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. Stock purchase agreements and membership interests agreements may provide voting rights or may require you to proxy your voting rights to pre-determined third parties.
Cancellation restrictions. Under Regulation Crowdfunding, once you make an investment commitment, you can cancel the investment commitment 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. Under Regulations A+, D and S, you traditionally have no cancellation restrictions and therefore your investment commitment is binding. Learn more.
Valuation and capitalization. No exchange or other secondary market is expected for securities sold under Regulation CF or Regulations D or S. Issuers fundraising 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 issuer 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. Depending on the way in which securities were offered and sold, the company may also not be obligated to file information regarding its business annually, including financial statements.
For Regulation CF, a company files a Form C with their disclosures, such disclosures are dictated by the SEC.
For Regulation A+ they file a Form 1-A, with disclosures dictated by the SEC which must be qualified by the SEC before sales may commence.
For Regulation D + S, the company provides a PPM (a private placement memorandum) or other documents at the issuer’s discretion to investors, but there are no specific rules or requirements.
Under certain circumstances, the issuer may cease to publish annual reports and investors may have no information rights under Regulations A+ and CF, no such reporting requirements exist under Regulations D and S.
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 engage in fraud. There is no way to control the actions of a company once an offering ends.
Lack of professional guidance. Many successful issuers 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.
This site (the "Site") is owned and maintained by OpenDeal Inc., which is not a registered broker-dealer. OpenDeal Inc. does not give investment advice, endorsement, analysis or recommendations with respect to any securities. All securities listed here are being offered by, and all information included on this Site is the responsibility of, the applicable issuer of such securities. The intermediary facilitating the offering will be identified in such offering’s documentation.
All funding-portal activities are conducted by OpenDeal Portal LLC doing business as Republic, a funding portal which is registered with the US Securities and Exchange Commission (SEC) as a funding portal (Portal) and is a member of the Financial Industry Regulatory Authority (FINRA). OpenDeal Portal LLC is located at 149 E 23rd St #2001, New York, NY 10010, please check out background on FINRA’s Funding Portal page.
All broker-dealer related securities activity is conducted by OpenDeal Broker LLC, an affiliate of OpenDeal Inc. and OpenDeal Portal LLC, and a registered broker-dealer, and member of FINRA | SiPC, located at 1345 Avenue of the Americas, 15th Floor, New York, NY 10105, please check our background on FINRA’s BrokerCheck.
Certain pages discussing the mechanics and providing educational materials regarding regulation crowdfunding offerings may refer to OpenDeal Broker LLC and OpenDeal Portal LLC collectively as “Republic”, solely for explanatory purposes.
Neither OpenDeal Inc., OpenDeal Portal LLC nor OpenDeal Broker LLC make investment recommendations and no communication, through this Site or in any other medium should be construed as a recommendation for any security offered on or off this investment platform. Investment opportunities posted on this Site are private placements of securities that are not publicly traded, involve a high degree of risk, may lose value, are subject to holding period requirements and are intended for investors who do not need a liquid investment. Past performance is not indicative of future results. Investors must be able to afford the loss of their entire investment. Only qualified investors, which may be restricted to only Accredited Investors or non-U.S. persons, may invest in offerings hosted by OpenDeal Broker.
Neither OpenDeal Inc., OpenDeal Portal LLC nor OpenDeal Broker LLC, nor any of their officers, directors, agents and employees makes any warranty, express or implied, of any kind whatsoever related to the adequacy, accuracy or completeness of any information on this Site or the use of information on this site. Offers to sell securities can only be made through official offering documents that contain important information about the investment and the issuers, including risks. Investors should carefully read the offering documents. Investors should conduct their own due diligence and are encouraged to consult with their tax, legal and financial advisors.
Investors should verify any issuer information they consider important before making an investment.
Investments in private companies are particularly risky and may result in total loss of invested capital. Past performance of a security or a company does not guarantee future results or returns. Only investors who understand the risks of early stage investment and who meet the Republic's investment criteria may invest.
Neither OpenDeal Inc., OpenDeal Portal LLC nor OpenDeal Broker LLC verify information provided by companies on this Site and makes no assurance as to the completeness or accuracy of any such information. Additional information about companies fundraising on the Site can be found by searching the EDGAR database, or the offering documentation located on the Site when the offering does not require an EDGAR filing.
To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. Therefore, when you use the Services we will ask for your name, address, date of birth, and other information that will allow us to identify you. We may also ask to see your driver's license, passport or other identifying documents.