Click to rate this post!
[Total: 0 Your Rating: 0]You must sign in to vote
So, let’s talk about risk
We’re not talking about skipping school or eating the questionable week-old leftovers (they don’t smell bad, right?), although those require a higher risk tolerance too. We’re talking about what happens when you invest your money in private offerings, like early-stage startups, crypto, gaming, real estate, and more.
What is risk? It’s the chance that the money you invest will either see gains (increase in value) or see losses (lose some or all value).
Different investments carry different types of risks and different rewards that may correlate with each other. That’s why, in general, investing in startups is riskier than investing in bonds, but the rate of return if a startup succeeds is typically higher than your average bond. (But don’t forget—the startup fail rate is a whopping 90%.)
How do you measure risk?
Risk is often measured by a combination of assessing what happened in the past and doing due diligence. Conducting due diligence is a long process (outlined in depth here by VC list) but if you’re investing money in a company, it’s important to look at their financials and documents to evaluate the risk for yourself.
In a company’s forms you can see their assets, income, debt, risk factors, details about the investment offering, the business plan, valuation, traction, team, product, tax and legal matters, and a lot more. (More on evaluating traction, team, and product here.)
On Republic, every deal has their corresponding documents on the right hand side. If you want to practice evaluating risk, head to republic.co/companies, find a deal that looks interesting, and dive into their paperwork, ask questions in the discussion, and pro-tip—google any terms or legaleze you don’t understand.
You have the power to invest in the companies you believe will be successful.
Ways to minimize risk
• Most importantly, don’t invest money you can’t lose
• Conduct due diligence and ask questions
• Diversify your portfolio with multiple types of investments
• Identify your investing goals and align your investments accordingly
If you’re interested in learning more about risk and how top VCs minimize risk and conduct due diligence, sign up for our Startup Investing Masterclass series. Kicking off this Friday, April 9th @ 2pm ET.
Hot takes in crypto: due diligence
With crypto rising in popularity and new tokens constantly popping up, there’s an important due diligence process to evaluate different tokens (rather than asking that one friend who’s into crypto what they think).
Crypto due diligence checklist:
• Was the smart contract audited by a reputable source? (Places like Quantstamp and Certik)
• Are they crypto-native? Is their business built on crypto rather than adding a token to their business model?
• What does the project do?
• How quickly was it launched?
• How’s their code in Github?
• Do other crypto experts support the project?
This checklist isn’t fool-proof, and even if a token passes all these checks there’s no guarantee a project will succeed. Every project carries its own risks, but these questions will help you avoid the “hype train” and make decisions you can feel confident about.
This week we’re highlighting deals that have gained the most traction over the last week.
• Intellivision Amico is a new video game system that’s redefining entertainment with family and friends. With over $25 million in pre-sales, they’ve got partnerships with MLB, Hot Wheels, Sesame Street, and more. They’ve raised over $8 million so far.
• Linen is an investing app that helps users earn shares in community owned projects. They’ve raised $1.2M from Coinbase, Polychain, HashKey, Youbi, and Wyre with over 15,000 app downloads and 1,300+ deposits to DeFi pools.
• Asaak has created a completely digital end-to-end lending marketplace for Africa, enabling individuals to access financial services and investors to invest directly into Asaak’s loans. They have $4.4M raised to date from top funds like Social Capital and 500 Startups, with a 39% gross margin and 17% profit margin.
• TapRm is a fast-growing beer e-commerce platform. They’ve sold over 1.5M beers with a $5M annual revenue run-rate. They’ve seen 670% annual growth and TapRm projects a $22M revenue over the next 18 months.
• AKUA is an alt-meat company making plant-based foods from regenerative aquaculture. Their Kelp Jerky won Time’s Best Invention and Fast Company’s World Changing Idea. They’re raising to launch The Kelp Burger.
• Tempo is an interactive gaming company with three pillars: studios, games, and community. They had $2.4M in revenue in 2020 and Tempo projects $4.5M in 2021. They’ve raised $5.85M to date from strategic investors like Galaxy Interactive and have one of the largest community teams in esports.
• Irrigreen is the revolutionary smart sprinkler system that saves water and money. They’ve raised $4.9 million from Silicon Valley’s top angel groups and have 6 patents. An independent study proved Irrigreen sprinklers save 40% more water than traditional systems.
MyndVR: MyndVR featured in Wall Street Journal, announces major research study with Stanford, plus collaboration with AT&T on future of healthcare.
Healthy Hip Hop: Awarded $500K bid from Dallas ISD • New App Launch in May w/ 1000 prepaid parents • Top 21 startups in Atlanta in 2021
Jane West: Jane featured nationwide for the 50th anniversary of 4/20: Podcasts, Clubhouse events, live fireside CEO chats and a red carpet premiere.
AudioCardio: Dr. Robert Traynor, Ed.D., MBA, FNAP, Kevin Liebe, AuD., and Tony Sulsona join AudioCardio as senior advisors to fuel growth.
Genius Juice: Launching in 3 Costco Regions in Q2 2021 expecting to triple run rate revenue by Summer 2021 at $6M+.
Strom Motors: Edges out top industry competitors and wins a major Vehicle Control Unit (VCU) order by an electric bus manufacturer in India.
Trusst: Trusst Health Inc. announces groundbreaking training and certification program for therapists who provide text-based psychotherapy.
Aether Beauty: We received another $350k PO from a brand new retailer that now brings us up to over $2M in net sales for 2021 already!
LILA: LILA made it to semifinals on the Meet the Drapers! Does love really conquer all? Watch this Saturday to find out!
Primal Life Organics: JP Sears signs on to promote Primal Life Organics to his audience.
AdWallet: AdWallet adds GV (Google Ventures) Media & Entertainment Advisor and former Pres. of Universal Pictures, Craig Kornblau to Advisory Board!
DigiBuild: To be featured speaker at major BuiltWorlds event highlighting blockchain in construction usage.
Launched this week
The new way to tour and buy a home
Exceptionally well-designed gear built for the modern traveler.
A segment is a group of users defined by rules set by you. Your users will automatically get added to the group as soon as they match the rules.