Take it from a man who knows who gets funded in Silicon Valley – crowdfunding opens funding avenues for more entrepreneurs.
Prior to founding equity crowdfunding for startups platform Republic, Kendrick Nguyen and cofounder Paul Menchov both worked at AngelList, with Mr. Nguyen serving as general counsel and Mr. Menchov as head of fundraising infrastructure.
“Being in Silicon Valley, seeing the volume of startups apply, and the type that got funded over time, I came to strongly believe that where the venture capital ecosystem was, where you get funded from accredited investors, was only beneficial for a few entrepreneurs,” Mr. Nguyen said.
That set Mr. Nguyen on a path to founding Republic, with the goal of providing more people with access to capital. Describing the road as both much fun and very challenging, Mr. Nguyen said he has tapped into all of his past experience as a securities attorney, venture hacker, and managing director.
Republic’s message of promoting entrepreneurship and making it accessible to more people has been well-received beyond his expectations, Mr. Nguyen admitted. He has seen opportunity grow for women entrepreneurs, who represent a large percentage of companies fundraising on Republic.
“Women founders do much better with crowdfunding than with other alternative finance avenues,” Mr. Nguyen said.
Crowdfunding brings capital investment out of traditional hubs like New York, Silicon Valley and Austin to entrepreneurs across America who now possess a clear way to validate their business model. It also helps promote more inclusive entrepreneurship, as Mr. Nguyen sees hope for current and recently incarcerated people who have valid ideas and want to turn their lives around. One company run by military veterans helped fellow veterans find employment in the civilian world following their service.
“People are excited to participate in crowdfunding and support these entrepreneurs,” Mr. Nguyen said. “People want to be engaged with the process.”
While Mr. Nguyen said that overall, crowdfunding has been slow to gain the anticipated traction, he avoids saying it has been disappointing. This is a long play and success will come in part by balancing the needs of entrepreneurs with pragmatic business concerns.
Go to conferences and you will hear plenty of talk about how there is a surplus of investment capital chasing a shortage of deals. Mr. Nguyen said that is largely due to how one defines a good deal. Many venture capitalists value a company by their unicorn potential and ignore solid entities with great potential to address clear needs because they may only grow to be worth $80 million.
Equity crowdfunding allows those smaller companies to connect with a different type of investor, such as millennials looking to invest in companies aligning with their values and professionals looking to invest smaller sums.
Mr. Nguyen said the Republic’s future depends on how well they can promote equity crowdfunding as a new way to invest. That will take time but the success of shows like Shark Tank and Dragon’s Den show the level of public awareness about capital investing is on the rise. Industry events help by providing opportunities for industry leaders to share their perspectives and those of investors and issuers with a larger audience.
“(Industry events are) a phenomenal opportunity to meet and discuss how to move the industry forward,” Mr. Nguyen said.