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OurCrowd invests it own capital into startups before putting them on its platform
(Updated with comment from OurCrowd)
The democratization of the Web has come in many forms, but the most unexpected might be how much easier it has become to find companies to invest in. With services, like Vator, CircleUp, FundersClub, AngelList and Crowdfunder, creating platforms dedicated to connect companies and investors, it seems that there has never been a time when it has been better for both sides to find worthwhile investments.
One of the newer players on the scene is equity-crowdfunding platform OurCrowd. Though only a little more than a year old, it has already seen tremendous growth and success in raising money for startups on its platform.
And now it has raised a $25 million Series B round, it was announced on Monday, to keep that momentum going.
The round included former Investec Bank Australia CEO Geoff Levy, and Mistral Equity Partners CEO Andrew Heyer. There were a number of other, undisclosed, investors. OurCrowd had previously raised a $5.5 million Series A funding round in February 2013, the same month that the service launched.
The Jerusalem-based company started with a focus on helping Israeli startups, and identifying companies that are seeking early stage investment, though it not seems to be looking to bring its platform to other countries around the world.
Here's how it works: OurCrowd invests its own capital in order to brings startups to its accredited membership; they put in roughly $50,000 in each one. The site's members, with consists of 4,000 accredited investors, then choose the deals they want to invest in via OurCrowd's managed partnerships.
Not just anyone can invest, though: OurCrowd investors have to meet "stringent accreditation criteria" and also invest a minimum of $10,000 per deal. In addition, OurCrowd also provides post investment support to its portfolio companies, assigning industry experts as mentors and taking board seats on those companies.
Connecting investors and companies is mutually benefitial, OurCrowd CEO, Jon Medved, explained to me in an interview.
For the investors, the platform allow a far greater numbers of accredited investors, which he says is around 50 million households, to get involved in this asset class.
"The reality for most wealthy people in that an institutional asset class are the ones who invest in venture capital funds," he said. " A very select group engaged in this, including angels who are networked."
The average wealthy person, though, has not engaged in this game by writing checks to VCs or companies, and there is $45 trillion in potential funding available out there, Medved said.
"We enable them to do what they should do by providing them with professional kinds of tools and making it a transparent process," he told me. "It's more than fun and profit of investing in a company, but also building them."
On the other side of the equation, companies need access to capital, and OurCrowd helps them avoid being tagged with anywhere from 25 to 100 individual shareholders before going public.
"I've tried to manage that and it aint fun," said Medved. "We provide the company with a single check, single board member, and a point of reporting, to handle their investor relations."
In addition, they get motivated investors, "dozens of fiery angels willing to go to bat for them."
Some of the rounds that OurCrowd has participated in include: $4.6 million in Freightos, a global online freight network, which has since raised another $110,000 from OurCrowd investors; $2.5 million in peer-to-peer boating marketplace Boatbound, which also raised $780,000 on the platform; and $7.5 million in enterprise mobile data protection company Nativeflow, which also raised $2,117,500 via the OurCrowd platform.
Despite its relatively young age, OurCrowd has been very successful in connecting companies and investors. So far, the company says that it has raised $43 million for its 36 portfolio companies from accredited investors in 26 different countries.
Portfolio company round size has grown from several hundred thousand dollars per deal to a new high of over $3 million in a single deal. Eighteen portfolio companies have already raised more than $1 million each through OurCrowd’s platform.
And the company has begun extending its reach out of its home country: four of its last 10 equity crowdfunding deals were for companies based outside of Israel.
The new funding will go expanding both geographically, as well as within Israel.
The company currently employs 40 people, and will be adding an unspecified number over the next year. At the same time, OurCrowd recently opened an office in New York, and has had visiting events all over Europe, Asia, Australia, the regions where it will be looking to expand to in the coming months.
(Image source: blog.ourcrowd.com)
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