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Good ideas are universal. Opportunity isn’t.
We set out to build Republic because we knew that good ideas are universal, but access to capital isn’t. It’s common knowledge that women and underrepresented founders of color1 are often overlooked by traditional funding sources. And while we think supporting diverse founders to succeed is the right thing to do, we fundamentally believe that it’s also great for business.
Data shows that diverse teams create more value for investors. First Round Capital took a look at the success of their portfolio companies over 10 years and found that teams with at least one female founder performed 63% better than male-only founding teams2. A 2018 McKinsey study showed that ethnically/culturally diverse teams are 33% more likely to lead in profitability3. Diverse founders tackle a range of problems, but they’re often starting businesses that solve “real world” issues in the communities they come from and are tapping into the $10 trillion collective purchasing power of women, Blacks, and Latinos in the U.S.4
So with this in mind, 2 years in, we’re taking stock of our contribution towards leveling out the investment landscape for diverse founders and investors. To date, 25% of investments on Republic have gone to companies with underrepresented founders of color and 44% have gone to companies with a female founder versus 1% and 13%, respectively, for the industry5.
An investing platform for everyone – unleashing the power of many.
In addition to democratizing access to capital for founders, Republic allows anyone, regardless of their income or net worth, to invest in startups for as little as $10 through equity crowdfunding (specifically under Regulation CF of the JOBS Act). A 2017 study by the Angel Capital Association found a sizable racial gap relative to the population among U.S. investors, and TechCrunch reported that women make up only 8% of VC partners, who are the ones ultimately writing checks. Our platform works to shrink these gaps by letting everyone open their wallets to invest in startups.
Fatima Dicko, CEO of Jetpack, an on-demand service that delivers everyday essentials focusing on the student market said,
Republic’s platform allows founders to engage people who wanted to support women and African American founders and never before had a practical means to do so..
Martha Hernández, Founder and CEO of MadeBOS, runs an AI-driven, career pathing platform for entry level workers. The majority of her investors were Latino and within that group, predominantly female. She said,
My campaign on Republic gave me the capital, credibility and visibility I needed to take my business to the next level. It provided a platform to activate my Latino community in Oakland who believed in me and wanted to do something actionable to support my business.
Obi Omile, Founder of the Cut, is building a mobile platform is modernizing the barbershop experience. The majority of his customers are Black or Latino. He was excited that Republic enabled him to galvanize a very dedicated portion of his user base to invest in the company. About the awesome results he said,
The campaign resulted in us gaining brand ambassadors who are now aligned with us in terms of the success of the business. The better they do, we do, so they are very active and engaged on our behalf on social media and offline in promoting The Cut.
Where we’re headed and how to get on board.
We have no doubt that more diversity in the startup ecosystem will be good for business. It’s too early to tell where it will have the biggest impact: higher performing teams, increased job creation, or the emergence of new industries. Equity crowdfunding has the potential to be a true catalyst for this change. We’re off to a great start, but you can help us speed things up even more.
Endnotes
1 Underrepresented founders of color are defined as Black and Latino/Hispanic.
2 First Round Capital data, First Round “10 Year Project”, 10years.firstround.com.
3 McKinsey, “Delivering through diversity” Report, January 2018.
4 Nielsen consumer data.
5 Republic investments include equity deals, excludes crypto deals. N=50.
This educational article is provided by Republic to help its users understand this area of the market, it should not be construed as investment advice as it is impersonal, disinterested and was produced by Republic for Republic’s users, without remuneration received or expected.
