Republic Cuts Through SEC Red Tape to Raise $16M via Security Token Sale

Under a pair of U.S. Securities and Exchange Commission (SEC) regulations, crowd-equity platform Republic has raised $16 million through the sale of its Republic Note security token.

Announced Wednesday, the firm secured commitments of $11 million through a Regulation D offering. An additional $5 million from non-accredited investors was committed through a Regulation A+ offering that has yet to be approved.

“What we did was a Reg D and a ‘testing the waters’ under Reg A+,” Republic CEO Kendrick Nguyen explained in a phone call. “We will hold [the non-accredited investors’] space until we can qualify the Reg A+ and close that step.” 

The Republic Note token is secured on the Algorand blockchain and allows holders to receive dividends from Republic Core, a Republic subsidiary. Dividends will be earned through exits of companies that did their initial fundraising on Republic. According to the project’s white paper, 800,000,000 Republic Notes have been minted.

Nguyen said that, of the chains that have features needed for security tokens such as anti-money laundering checks and white-listing investors, Algrorand “is truly faster, cheaper.”

Part of the crowd-equity sector that grew out of the JOBS Act of 2012, Republic has facilitated over $100 million in investments since 2019, allowing individual investors to join rounds alongside major venture capital firms.

Overall, more than 10,000 people sought to participate in Republic’s latest token offering, the company said in a press release. Roughly 700,000 people have used the site to invest in projects.

Multiple offerings

Republic had announced a $12 million pre-sale of security tokens in 2018 with support from Binance and NEO. Ultimately, Republic broke these sales into four phases, as described in the Republic Note white paper. 

In phases one and two, the company raised roughly $12.5 million. This current sale represents phases three and four. 

Algorand was a strategic investor in the prior phases of Republic’s fundraising, along with Binance. Nguyen said that once Binance Chain is able to support security tokens, a wrapped version of the Republic Note for the Binance Chain will be created. It is meant to work much like wrapped bitcoin (WBTC) does on Ethereum, a one-for-one pairing. 

When the Republic Note offering closes at the end of the presumed Reg A+ approval, the company will have raised roughly $28 million in token sales, Nguyen said. With additional sales of company equity, the firm will have raised approximately $40 million since inception.