NEW STARTUPS

⏹️ Qube (LINK) 

Budgeting app that promises to save users $400+ per month

🤖 Numurus  (LINK)

AI software attempting to create Windows for robots

🚗 Swift Ride (LINK)

Easy car access for gig workers struggling to keep up with demand

Republic’s Mirror Tokens: A Risky Reflection?

Just dropped: Republic’s new mirror tokens.

For the first time ever, retail investors (even those without accreditation) can access the upside of highly coveted startups. They’re starting with SpaceX - an Elon Musk-founded company that aims to enable human populations on other planets (almost as ambitious as me writing this newsletter!).

Republic expects to open up mirror tokens to dozens of other exciting private companies - so what exactly are they?

Taking the SpaceX token as an example, they’re digital tokens whose value mirrors the valuation of SpaceX. If SpaceX increases its private valuation by 10x, the tokens will increase in value at the same rate.

But there’s a catch.

Republic has no affiliation with SpaceX, and the tokens are backed by nothing other than Republic’s word that they’ll honor valuation increases. This presents some unusual risks that most traditional investments don’t have.

I like the idea but I think investors should stay far away from these - I’ll explain why later on.

Mirror Tokens: What You’re Really Buying

Republic’s mirror tokens are structured as debt instruments issued by RepublicX LLC, not equity in the target company. Mirror tokens on Republic currently have an investment minimum of $50 and are ‘locked up’ for 12 months after purchase, meaning you cannot sell them within that time.

• The tokens are unsecured debt of Republic, backed by nothing but the firm’s ability to pay.

• Investors have no ownership, no voting rights, no asset claim—just a contract with Republic.

Unbacked assets already exist and they can work - the U.S. dollar is backed by nothing other than the belief in the U.S. government.

But the U.S. government is a trusted institution that’s existed for 200+ years, whereas Republic is a startup that’s struggled at times to find its footing.

There’s levels to this kind of thing.

Double Trouble Risk

One of my main reservations about mirror tokens is that you are essentially doubling your risk:

1. Startup Risk – the risk of SpaceX (or whichever startup) failing as a company; this one is not new to investors, it’s the inherent risk of investing in anything.

2. Platform Risk – Now on top of that, what if Republic goes belly up? Then there’s no payout regardless of how well SpaceX performs.

Imagine SpaceX skyrocketing 1,000×—and then Republic announces bankruptcy. Your tokens are worthless. That is a real scenario that investors need to consider.

Unclear Funding For Mirror Tokens Payout

One thing that is unclear to me is where the money comes from to pay out investors.

If Republic sells $5M of tokens, and then SpaceX increases 100x in value, Republic isn’t going to have $500M in cash lying around to pay out investors.

Remember, Republic’s mirror token aren’t actually backed by equity in the related startup. When the valuation of SpaceX goes up, they don’t financially benefit from that.

My guess (which I do not know if it’s true), is that Republic could hedge their risk by acquiring SpaceX stock via secondary sales of existing equity holders. It would have no connection to the mirror tokens, but would at least provide them some liquidity to pay investors if SpaceX valuation climbs dramatically.

Other Logistical Concerns I Have

SpaceX (as well as these other startups) are private companies.

In some funding rounds, the updated valuation isn’t made public. In this instance how would Republic know how to value the startup?

Worse than that would be an acquisition where the purchase price isn’t made public. If SpaceX is acquired by Lockheed Martin for an undisclosed price, how the hell is Republic going to know what to pay token-holders?

Lastly, what if SpaceX or another company doesn’t like that Republic is using their name on a product - could they sue Republic to have the token removed?

There’s a lot of question marks and the Republic team hasn’t been active in answering comments on their website.

Bottom Line - Mirror Tokens are Fake Equity and Should be Treated as Such

Mirror tokens are a clever idea but too risky of a financial instrument. They offer access to highly coveted unicorns—but at a steep cost:

• You’re not buying actual equity, just debt and a promise from Republic.

• You have no shareholder rights, and the tokens are not backed by company assets.

• You’re doubling your risk exposure, carrying both the risk of the startup and Republic.

• You’re relying on a new, lightly tested tokenized fintech model.

• Logistical concerns around valuation and how Republic can afford to pay large payouts have gone unanswered.

I certainly understand the attempt that Republic is making here - but almost every other asset is backed by something; real estate has the actual property and land, stocks have the underlying business assets - mirror tokens - have nothing.

The extreme increase to risk is not worth the potential upside that these tokens may bring, and so I am sitting out on these financial instruments.

What’s your take?