Bullish Crypto Venture Capitalist Advises Everyone to "Invest Only Small Amounts"

Omar Faridi
  • Blockchain technology will transform existing sytems by effectively eliminating the excessive costs associated with intermediaries during transactions, Republic CEO Ken Nguyen said.
  • The crowdfunding platform's co-founder advised everyone to "only invest small amounts" in crypto "or only as much as they can afford to lose."

Kendrick Nguyen, the co-founder and CEO of Republic, an equity crowdfunding platform, recently explained that his company allows "anyone, anywhere [to] invest small amounts in projects with curating, so out of thousands of applications, we pick out the ones that we find suitable and we launch them on [our] platform."

12-Year Old Crypto Entrepreneur

Nguyen also said the investor could be a student or a millionaire and “if they take an interest” in a particular project and invest, then [according to] their requirement, they “can close the round.” When questioned about how one of his firm’s projects was being lead by a 12-year-old, the finance professional confirmed that the “Pocketful of Quarters” crypto gaming platform was, in fact, being actively managed by young Greenwich Country Day School student, George Weiksner.

Nguyen explained that Weiksner “didn’t just create a company and come to us, and we launched” his project. He added, “before launching on Republic, there are advisors and the company’s support behind” it.

“We look at the project’s whitepaper and if we think that it’s credible,” according to our uniform standards, then we proceed further, Nguyen noted. However, the corporate finance graduate said, “I can’t tell you to invest” in Weiksner’s project, “but I would encourage you to invest a small amount in all of the live projects currently on Republic.”

The "Amazon" Of Private Investing

“Long-term, I think there are amazing entrepreneurs building amazing things”, Nguyen remarked. Responding to Republic being around for a number of years, as the company was launched in April 2016, but only recently making the decision to allow crypto firms to join his crowdfunding platform, Nguyen said:

the vision for republic is to be ultimately the Amazon for private investing. You can’t be the ‘Amazon’ for anything if you just sell one product.

Kendrick Nguyen

As we look at the ecosystem, it became very clear that crypto tokenization, blockchain-enabled startups will be a key component of the business, the economy. That was just a natural expansion of our core business

Kendrick Nguyen

Commenting on what interests him the most about crypto, the former AngelList general counsel said, “I came from a fintech background, after having been a securities lawyer, I went into asset management.”

Eliminating The Middleman

Observing the existing trends in the world’s financial markets, Nguyen said he realized most of the transactions were dependent on, or involved, “trusting the middleman.” One of the main drawbacks of this system is the “charging of [extra] fees, whether it be custody, fund administration,” the former Stanford law fellow pointed out.

Going on to elaborate on the potential benefits of blockchain technology, Nguyen said it “enabled the disintermediation of that ‘middle function’ and provide value back to the” parties involved in the transaction.

The elimination of the middleman can lead to “tremendous change and impact, and potential for every single sector that I can conceive,” the Republic CEO noted.

When asked about his investment TV show (“Meet the Drapers”), which features the Draper family, Nguyen explained that it’s a series on Sony Cable TV “that’s similar to Shark Tank.” It’s where entrepreneurs “go pitch” their projects to a panel of judges, and “if they like a company or a judge’s decision, then they can” submit their project proposal to the Republic.

"Meet The Drapers"

Preparing to launch the “Meet the Drapers” show took a lot of effort due to the “logistics” and “legal issues” involved in introducing such a TV program, Nguyen noted. However, after the show’s first season was over, the Republic CEO revealed that “actual engagement was really low.”

“But I do think that in a couple of years, hopefully” the show will take off, Nguyen said.

Responding to a question about what the difference is between AngelList investments and his company’s investment model, the Berkeley University graduate said AngelList “only accepts accredited investors. That means loosely defined millionaires. That leaves 97% of the population out of tech investing and crypto investing. Republic is solving that.”

In order to protect investors as cryptocurrency prices continue to decline, Nguyen acknowledged that: 

early stage investing in crypto is highly speculative and highly risky. So, by providing a lot of disclosure, we hope everyone knows that they should only invest the money they can afford to lose. That said, I’m very long on this technology and the impact potentially it will bring.

Kendrick Nguyen

Only 1 Out Of 30 Applications Approved

He continued:

So, I think it is fair to say that I do encourage everyone to invest small amounts in order to be a more 'engaged citizen' and be more aware of 'innovation'.

Kendrick Nguyen

Elaborating on the selection criteria for investors, Nguyen said “anyone can invest”, but for companies looking to join Republic, “our acceptance rate is lower than Harvard.”

“It’s [about] one out of thirty” companies that we actually launch, the Republic CEO revealed. At present, Nguyen said there are only three active crypto projects. When asked what investors receive when they join Republic (shares or tokens), the finance professional explained that “it depends case by case.”

“One scenario is in a forward contract [where if] you put in a $1,000 today, [and] when [the investor] issues [their] tokens at $1 per token. The other example is if you already have tokens to be issued, the agreement can say ‘hey, I’m buying tokens out at this moment’. And in some cases, certain tokens do represent underlying equity and that will be structured in different environments,” Nguyen said.

Responding to how his firm deals with crypto-related fraud and companies who pull exit scams, Nguyen remarked that his company “dishes out an instrument in the spirit of investor protection and for some projects the proceeds are held in escrow. This obligates the project to meet certain milestones before we release them.”

"Productizing Escrow Investor Protection"

He added:

Compared to a lot of initial coin offerings (ICOs) out there, the investor delivers money and they can go to Vegas, and spend all of it with no accountability. That’s probably no longer the case, at least not in the US. But we take a step further to ‘productize’ the escrow investor protection function.

Kendrick Nguyen

Commenting on all the different services Republic offers, Nguyen said,

I would call us venture capitalists ‘plus’. That is we do take on a further component of investor protection because VCs deal with sophisticated investors, LPs, whereas we deal with everyone. The threshold, obligations are higher for us from the perspective of the Securities and Exchange Commission (SEC).

Kendrick Nguyen

Notably, Republic is planning to issue its own crypto tokens and intends to start selling them next year, according to Nguyen. “The token will have an equity-revenue component to it, as well as functionality,” Nguyen added.

Per the fintech entrepreneur, the tokens will be sold directly through the Republic platform, “off Republic”, and in “several [other] formats that will allow for widespread distribution. But of course, in a complied manner.” The token’s whitepaper will be released “in a few months” and Nguyen said he would “share more details at that time.”