We recently caught up with Kendrick Nguyen, the co-founder and CEO of Republic, a leading US-based investment crowdfunding platform. He is also a founding director of the Association of Online Investment Platforms (AOIP).
In July 2020, Republic added 30 more venture partners to its platform.
Venture Partners are described as leaders in their space who work with companies considering raising capital via a securities crowdfunding offer and those who have completed crowdfunded offering and need guidance on their next steps. Venture Partners are said to receive referral bonuses and benefits throughout their term with Republic.
Also in July, Republic Note, a profit-sharing digital asset launched by Republic, had generated solid interest – in excess of its stated $8 million goal. Republic Note had surpassed $10 million after launching live that past week.
Republic Note is being offered under two separate exemptions. The first is under Reg D 506c for accredited investors. The second is under Reg A+, an exemption that accepts both accredited and non-accredited investors. The Reg A+ offering must be qualified by the Securities and Exchange Commission – something that has yet to occur – but under the exemption, an issuer may accept indications of interest under a “testing the waters” rule.
As reported on August 7, 2020, Republic Note sold out. It received $16 million in commitments as it increased the investment limit for what the company describes as a unique income sharing digital security.
Crowdfund Insider: Please tell us about what your expectations are regarding Republic Note. Please discuss why you feel it’s an important offering.
Kendrick Nguyen: The Republic Note token as a profit-sharing token is the first digital asset of its kind as far as we know. We aim to make it widely accessible to interested participants, regardless of income or net worth, which is a unique attribute that we believe will drive adoption for the entire industry.
Crowdfund Insider: The initial coin offering (ICO) and initial exchange offering (IEO) craze has negatively affected the reputation of the nascent crypto and blockchain space. However, Republic Note is a compliant, security which means that it adheres to strict standards that aim to ensure consumer/investor protection. What are your thoughts regarding the ICO/IEO markets? Security tokens? And how Republic Note might fit into this picture.
Kendrick Nguyen: It’s not a secret that in the past, many projects ignored regulatory compliance when conducting their token offerings and selling to everyone, everyone. Over time, many credible projects aimed to comply by limiting token participation to accredited investors only and/or by excluding US residents altogether.
This approach has the unintended consequence of slowing down adoption, perhaps contributing to the “crypto winter” in 2019-2020. At Republic, we aim to work with the existing laws and regulations here in the US to make offerings of traditional and digital securities available to both accredited and non-accredited investors.
It’s not easy but very much doable and essential to mainstream adoption. And we believe our approach will become the norm for security token offerings (STOs).
Crowdfund Insider: Republic Note was offered under two separate exemptions. The first is under Reg D 506c for accredited investors. The second is under Reg A+, an exemption that accepts both accredited and non-accredited investors. The Reg A+ offering must be qualified by the Securities and Exchange Commission – something that has yet to occur. Please discuss the importance of complying with these requirements. How does Republic intend to work with investors from other locations across the globe that might be interested in the platform?
Kendrick Nguyen: As discussed, existing regulations and exemptions under US securities laws make it possible for non-accredited investors to participate in private offerings of securities if the issuer complies with relevant requirements and trading restrictions.
We did conduct a private offering under Reg D 506(c) last month, accepting only accredited investors. In order to accept non-accredited investors, we will need to receive qualification to conduct a Reg A offering or pursue a Reg CF offering.
And separately, if we ever actively sell and solicit in a foreign jurisdiction, we will need to comply with local laws as well. All this may sound overly complicated, but it will be less so for other projects that borrow our roadmap for their own tokenization efforts. And in the world of digital securities, you gotta have patience and a willingness to navigate legal complexities if you aim for retail access and mass adoption.
Crowdfund Insider: The COVID-19 outbreak has created economic uncertainty on a global level. How is Republic preparing to respond to this unpredictable environment?
Kendrick Nguyen: Sustainable growth is the name of the game during these uncertain times. In other words, we strive to be sustainable and profitable from this point on, and not just relying on venture financing. Sustainable growth is also a general lens through which our investment adviser, Republic Labs, evaluates companies with traction that come to us seeking private funding.
Crowdfund Insider: Alternative assets like gold and Bitcoin (BTC) appear to have become increasingly popular as the world struggles to cope with the pandemic. Do you think there’s really a market for gold-related/backed/associated products in the crypto or blockchain sector? Do you feel that Republic might want to look into this as a potential offering?
Kendrick Nguyen: I’ve been pitched on stablecoin projects that aim to track the value of gold (or a comparable in-demand asset) in recent months. Definitely compelling and viable. Right now, Republic is focusing on real estate, private equity, and business financing, but we very much believe in the future of tokenized everything and do plan to offer a wide range of investment products to our community over time.
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