This equity crowdfunding platform from Jerusalem solving startup's funding problems.
21st, September 2017 - International Startup
The advent of the Internet in 1995 heralded in a revolution, which ushered in a new age for business - especially start-ups, and would completely revolutionize the way business is done around the world. The first dot.coms appeared shortly afterwards, and the business world soon separated the winners from the losers. Today, the Internet has made E-commerce possible, and has created the same culture that is nurturing start-ups.
While being the owner of a Startup is rewarding, and offers a great deal of flexibility and freedom, it is not without risk, especially the risk of failure. One of the major factors leading to a start-up’s failure is the lack of adequate funding. OurCrowd, a Jerusalem based startup, be the solution to this pressing problem.
OurCrowd is an equity crowdfunding platform which allows accredited investors to provide promising early startups with much needed investment. The company is fairly new, being founded in 2013. OurCrowd has a presence in four nations: the United States, Canada, Australia, and Singapore. OurCrowd has a good chance to be successful because it is unique in objective, mission, and operation. All members (shareholders) invest in the company through its shares, and this investment is pooled together into a fund. Only accredited investors can become members in this manner.
Interestingly, OurCrowd requires all of its Israeli portfolio companies to donate part of their equity contributions to charity when they are asked to invest in the company. What this means is that if an Israeli investor was to invest $100,000, perhaps 10% of that, or $1,000 would go to charity. Our Crowd is managed by experienced investors. OurCrowd invests in startups because it's management team believes that startups with potential will become very profitable providing they have access to adequate funding from the beginning. Since many of these startups are social enterprises - for profit companies doing business to help out society, and to drive positive change in society, OurCrowd believes it can make a positive difference in both the corporate world, and in the world in general.
All interested and accredited investors support a particular business or project by investing in its shares. The money then goes to support the business or project. The magic behind this type of crowdfunding is that it allows smaller investors, and investment firms to invest in the types of projects and companies that only big and established venture capital firms had access to. This strategy allows emerging investors and firms to acquire a stake in and influence companies from the beginning, before the general public hears about them. This gives the investors the opportunity to have a great deal of power and wealth in the long-term.
Any investor who is accredited in their domicile nation can register as an accredited investor. All investors will have complete access to information about the companies that are on OurCrowd’s exchange. Many nations require investors to meet certain criteria before being accredited, which include: all investors having a certain minimum level of income and net worth, and all investors being able to provide official documents proving that they meet the criteria. To use an example, The American government requires all investors to have annual income of at least $200,000 for the previous two years, or net worth (excluding the equity in the home they live in) of $1,000,000 to be considered accredited.
Our Crowd was founded by an American named Jon Medved. He is one of Israel’s leading venture capitalists, and is one of the ten most influential Americans in Israel. He is a serial entrepreneur, who is a leading high tech venture capitalist in Israel, according to the Washington Post. Our Crowd is currently the top Global Equity Crowdfunding platform for accredited investors and angel capitalists.
Though small in size, Our Crowd is dramatically reshaping the investment world because it is one of the largest crowdfunding organizations in the world. The startup was founded in February 2013, and has raised over $300 million for more than 100 portfolio companies since then. Our Crowd’s amazing success in a short period of time can be attributed to the background, resourcefulness, and knowledge of Medved, who has a strong and rich background as an investor and an entrepreneur. He helped establish many Israeli startups, and has invested in almost 200 startups as a venture and angel investor.
He helped 20 of the startups he invested in reach valuations of over $100 million, which is commendable and rare for startups. Medved cofounder Vringo, a leader in social mobile apps, helped the company go public in 2010. Medved has a deep and rich history in the startup world in terms of investing because he founded and was a General Partner in Israel Seed Partners, a major venture capital fund firm in Israel. The firm has been very successful, because it has $262 million in capital, which is being managed by four funds. These funds have invested in 60 leading Israeli companies.
Some of the companies Israel Seed Partners invested in are: Shopping.com (now part of EBay), Compugen (publicly traded on Nasdaq), Answers.com (publicly traded on Nasdaq, and part of Summit.com), etc...Medved founded MERET Optical Communications before he founded Israeli Seed. He was Executive Vice President of Marketing and Sales at MERET. He moved to Israel when MERET did after being acquired by Aramco Corporation.
Our Crowd’s long-term prospects are good because the equity crowdfunding industry is relatively new. In this industry, people (like the masses) invest money in an unlisted (privately held) startup in exchange for corporate shares. This type of investment is risky because the companies are not established, and the investors can stand to lose all of their investments if the company fails; however, investors can reap heavy monetary gains if the company does well.
Many equity crowdfunding platforms have emerged in recent years which have allowed anyone to invest in promising startups before they are well-known. This gives little-known investors the opportunity to become rich and powerful faster than was the case before the advent of the Internet.
Because Israel is a developed nation, its equity crowdfunding industry is much much more developed, and is much better established than India’s is. For example, Israel’s crowdfunding industry is growing at 10% a year in comparison to India’s 5%. The investors in Israel’s industry are well-known multi-nationalist which have funded global giants like Compugen. Investors in India are more regional players, and are smaller in terms of asset capitalization. The companies they fund are smaller in scope as well.
Because Israel is the gateway to the global business market in many regards, OurCrowd has the strong potential to become a household name in the crowdfunding industry, provided they continue their strategy of supporting solid investors and companies.
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Prita Kulkarni is an a new mother with three years experience in research, writing, and analysis. She is passionate about research, and her hobbies include: cooking, writing, reading on interesting articles, philosophizing, and listening to music. When she is not cooking, cleaning, or taking care of her son, she can be found on the computer doing research projects. She can be contacted through Facebook.