Weekly Roundup: Claws Out 🍹

Happy Friday, DVC! This week, hard seltzer powerhouse White Claw announced its first-ever line of non-alcoholic seltzers. While this seems like a no-brainer, some are concerned that the nearly identical branding and flavors could lead to dangerous mix-ups with the 8% ABV versions…

For the safety of my fellow water connoisseurs, I’ll volunteer to blind taste test a pack of White Claws at random. In 30 minutes I’ll either be VERY hydrated or VERY incoherent. Stay tuned (and forgive any typos…)

Startup News & Weekly Poll:

If you’re on Republic’s email list, you probably saw at least one of the 37 emails they sent this week about the new Republic Note. If not, then 1) I envy your inbox discipline, and 2) let’s dive into an overview!

The Background:

In DVC we often talk about each crowdfunding platform having its own unique style. Example 1: Wefunder = Crowdfunding OG’s with tons of SAFEs/Convertible Notes. Example 2: StartEngine = Tons of Common/Preferred Stock and nonstop pictures of Mr. Wonderful.

Historically Republic holds a smaller share of the RegCF market (shoutout to KingsCrowd for the data!) and has always done things a little differently than its crowdfunding peers.

Notably, Republic takes a 2% fee of each campaign on its platform - all paid out in equity. Example: If Company ABC raises $100,000, Republic takes $2,000 worth of equity. 

So, after hundreds (if not thousands) of raises, Republic has built a massive startup portfolio. Plus, they’ve also deployed $650M+ into companies like SpaceX, Robinhood, and Carta through Republic Capital (their in-house venture arm) while diving deep into the blockchain/web3 space with Republic Crypto. 

Fast Forward to Today:

After years in the works, they’ve officially launched the Republic Note - a dividend sharing token “backed by an evergreen private equity portfolio”. 

Since that was full-on attack of finance buzzwords, here’s how it works:

1. Republic has issued a total supply of 800 million Notes on INX - a digital asset trading platform

2. If Republic’s pool of 2% ownership stakes have any successful exits, 100% of those profits are added to the Republic Note profit pool

3. If any of Republic Capital’s portfolio companies have exits, ~2.5% of the profits are added to the Republic Note profit pool

4. Whenever the profit pool reaches $2 million, the full pool is paid out in dividends to Note holders

Current Republic Note Stats:

• Companies in Note Portfolio: 765

• Current Profit Pool Value: $920,000

• Total Note Supply: 800 million

• Current Note Price: $0.35/Note

“Back of the Napkin” Example - Buying $100 Worth of Notes Today:

1. At $0.35/Note, $100 buys 285 Notes

2. $2M profit pool / 800M Notes = $0.0025 profit per Note

3. 285 Notes gives you a total dividend of $0.7125

Time for a poll… Choose an answer below and see how you stack up next week!

Last Week's Results:

Last week we shared some pseudo-math stats about the long-term returns of investment fund managers and asked if you knew what the “2 and 20” fee model meant. We’re happy to say that 71% of you correctly answered “2% per year fee + 20% cut of total profits”!

Under the 2 and 20 model, hedge funds and VC's charge a 2% annual management fee on their fund's total size and earn a 20% "carry" (performance fee) on all investment profits. The 2% fee is used to pay employees' salaries and company expenses, while the 20% carry is a reward that is typically split between the fund's general partners (managers). Not a bad gig…

Vote for New Deals:

Help select DVC's future deals! Please view the options, upvote your favorites, and suggest your own!

New companies suggested this week:

• Lovebox

Deal Review #71 Summary:

This Venture Pool for Plei was successfully funded with $150 in commitments from 3 Investing Members! DVC has committed the Club's investment on Republic (see DVC Portfolio Manifest) and issued individual confirmations to the "My Portfolio" section of your DVC accounts.

Overall, DVC Members were impressed with Plei due to its notable traction in the US soccer market, its success bootstrapping to profitability, and its ability to survive a full shutdown during COVID. Not many founders can claim such feats on their resumes!

However, members also expressed some reservations about the deal. Notably:

1. No specifics on how Plei plans to pursue its 2024 global expansion. I.e. The world’s pretty big and 365 days is pretty short…

2. Unclear how much of the $45B+ total addressable market (TAM) can actually be captured. Contrary to Pokémon’s teachings, it’s impossible to “catch ‘em all”…

3. As we often point out in DVC, the founders’ (well-intended) personal loans to the company give them higher payback priority than RegCF investors in the event of an exit or failure

So, will they capture literally every soccer player on Earth? Only time will tell. But for now they have $700k+ of fresh capital and a long runway to work with. Go Plei!

Bonus Links for this Deal:

DVC Portfolio Updates:

Read on for recent updates from past DVC Deals!

ZenniHome (Deal #62) - Breaking Ground!
In its first update since DVC’s August 2023 investment, ZenniHome shared that it has broken ground on its first multifamily development in Mesa, AZ! The new “ZenCity” will bring a grocery store and 90 new apartment units to just a ½ acre lot. See full update.

Qnetic (Deal #40) - Hello from Shanghai!
Renewable energy startup Qnetic shared a detailed update from the company’s new office in Shanghai! Qnetic has been growing its team and lab, making progress on its battery prototype, and filing for patent protections! See full update.

RAD AI (Deal #9) - New Raise Just Dropped 🕵️ 
Mere weeks after closing its most recent round on Wefunder, RAD AI has announced a new self-hosted crowdfunding round. Given the short time between raises and limited details (from the otherwise very vocal team), we’re curious to know more… See company’s announcement.

Thanks for reading & participating! Have a great weekend and see you for a new Deal Review next week!

Sincerely,

Team DVC