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iAngels raised a $2.25 million round through its own platform last month
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The last few years have been an interesting time for investing, as the rules for how companies can find investors have been turned upside down.
Take YouMail, a provider of cloud-based telecommunication services for consumers and small businesses, which raised a $5.5 million Series B round of funding earlier this month. Rather than going the traditional venture capital route, though, the company took advantage of provisions in the JOBS Act and was able to raise the funding from 30 different private investors by marketing its offering on the Internet and on webcasts. Raising money this way would not have been possible just a few years ago.
Of course, now accredited investors need a way to connect with companies seeking to raise money, which has led to the rise of equity crowdfunding platforms, such as CircleUp, OurCrowd and a new player in the space: an Israeli company called iAngels.
iAngels announced last month that it had raised a $2.25 million seed round led by Millhouse LLC, and backed by hedge fund magnates Boaz Weinstein and Marc Lasry, along with such as Alex Waislitz, Marcy Simon, Gigi Levy, Daniel Recanati and Yanki Margalit.
The most interesting thing about this: the company financed itself through its own platform.
"One key element about iAngels is that you invest along with other anchor investors. Compared to any other crowdsourcing platform where a lot of people invest small amounts, here it is the other way around, with a few people that have scouted a great opportunity and project and then you are exposed," Tiberiu Toader, Manager of Commercial Planning for Philip Morris Norway and an angel investor in iAngels, told me.
"When you have anchor investors, then you have people that can help in selecting the right company, while also having skin in the game. And more than you have."
Toader already knew Shelly Hod Moyal, one of the founders of iAngels, having met her at a conference a few years ago. And it was the fact that she was involved that made him confident to invest.
"To be very frank, I basically invested because I fully trust Shelly’s professional skills. I believe in the team, the founders, and their skills to scout and identify the right opportunities," he said.
"I invested because I have a passion for their product, but this was more than an investment. It also about being able to give input, and talks with Shelly, to discuss my views as an investor on how to get things done at iAngels. It's not just investing money but also being able to make suggestions, bring input in the business."
When you invest in BMW, for example, you can't just call up the CEO and tell him what you think, but "with this kind of investment you can pick up the phone and make suggestions if you have the right founders."
Toader sees iAngels as being potentially disruptive to the financial industry, especially in Europe, a place where, he says, there has been not been much crowdfunding yet.
"What is important, I think, is about going global. That is what drives my passion for this company. Right now they are in Israel, and working internationally mainly in the United States and Hong Kong. I am fascinated by the idea of bringing this to Europe, where they have not been so exposed to crowdfunding," said Toader.
"In Europe, we are different than the U.S. We are afraid of failure, afraid of losing, afraid of taking too many risks. We are a society that is very much dedicated to preserving our ways. There is an opportunity for iAngels to basically show customers and consumers that they can participate abroad, to the most interesting countries and entrepreneurs. Say that they are connected to opportunities that would never have been exposed to in Europe."
I spoke with Moyal, and her iAngels co-founder Mor Assia, about how they see the future of equity crowdfunding, what they will do with the money they have raised and what makes them different from others in the space.
VatorNews: What is the problem that iAngels is trying to solve? How does it solve it?
iAngels: iAngels provides investors access to a unique asset class - Israeli startup investments that are backed by the top-performing professionals and industry insiders. iAngels closely collaborates with top performing angels, creates research and data-driven analysis of the opportunities, and offers participation in this exclusive proprietary deal flow.
So many people have told us they want in on Startup Nation and its unique entrepreneurial DNA, its groundbreaking innovation and technology. But foreign investors are not able to engage in this ecosystem because they often lack the knowledge or relationships on the ground. They need someone who can be their eyes and ears in Israel and provide them with a personalized investing experience, tailored to their needs.
We identified this need through our global experience of living in the US as well as Israel. In Israel, we
grew up with entrepreneurs and know the startup ecosystem inside out. We’ve established close ties
with the angel community in Israel and have effectively recruited them to our mission. Living in the US,
we saw how difficult it was for investors to identify the good opportunities and, even more so, that they
are indeed receiving good investment terms and that their interests are kept. This was usually not the
case. With iAngels, investors are not only able to enjoy the visibility and access, but also benefit from
investing under the exact same terms as the industry's most valued angels and funds. And they enjoy a
high level of transparency too.
VN: Can you give me some use cases. How and why does a typical customer use iAngels?
iA: A typical investor in iAngels is someone who is looking to grow and diversify his financial portfolio. At
the same time, angel investing is not his day job, making it difficult to screen large quantities of startups
and evaluate them individually.
Additionally, he/she is restricted to investing close to home. While investing overseas may be appealing,
it currently seems unmanageable. He/she is very sophisticated, expects a high level of service, analytics,
reporting and transparency, and, he is expecting to achieve high returns.
It could be a doctor, a lawyer, an Industry executive or a professional. It could be an investor who has
never invested outside his/her own country, someone who is heavily invested in other verticals (such as
real estate) and is looking to diversify into VC. It could be a family wealth management officer who
knows that the family wants to invest some of their wealth in Israeli success stories but wants to be sure
she is choosing the best opportunities and deals. All understand the value proposition of investing in
Israel in a highly curated way.
VN: Talk about the process of raising the funding through your own platform. What does this prove to
you, and other, about what iAngels can achieve?
iA: We decided to raise a round of finance for iAngels. We are startup in our own right and have come to a point where it made sense for us to think about scaling the business significantly. We secured Millhouse LLC (Roman Abramovich's fund) as the lead on our round and paired his investment with additional commitments from some of the most renowned and established names in the financial industry such as Boaz Weinstein, the founder of Saba Capital Management Hedge Fund, Marc Lasry, co-founder and CEO of Avenue Capital Group and other angels such as Alex Waislitz, Marcy Simon, Gigi Levy, Daniel Recanati and Yanki Margalit.
We always pride ourselves as sourcing the best deals and providing access to our investor community.
What could be more consistent than inviting our global community of investors to not only act as our
users but also shareholders?
The investment opportunity was launched on the platform to raise the final 1m from our iAngels
investors. Within a couple of days, we had over a million dollars of commitments from our community,
to the point we had to close the round on the platform as we could not accept more investments in this
We saw this as a significant vote of confidence from our investors, who voted with their commitments
and showed us how strongly they support what we do. The fact that this group of sophisticated
investors chose to invest in iAngels and have effectively selected us as their investment arm into early
stage startups validates our model and value proposition.
VN: Do you select startups for investors to invest in? If so, what is the selection process to find good
iA: Yes, we are an investor driven platform and our whole purpose is to provide investors with access to
promising startups that are backed by Israel's top performing investors and have gone through vetting
and due diligence. Today we receive over 60 applications for fundraising a month and out of these we
select only 2. For each startup we have a checklist of items required for the startup to be displayed on
our platform. This includes, among other things, a professional angel or VC with a track record investing
in the opportunity with us under the same terms, an industry expert opinion, technological review and
several meetings with the team and reference checks.
One of our key differentiators is that we look at the angel investors and VCs involved as much as we look
at the company - their track record, the exits they have produced, their involvement with the
entrepreneur, whether the terms of the deal put our investors and them on the same page.
VN: How many startups have raised funding on your platform and is it like Kickstarter where each
startup fends for themselves? Or is it more like Ourcrowd and CircleUp where the company is actively
helping companies raise money? Or is it like AngelList and FundersClub where those companies are
promoting different investment managers?
iA: 15 startups have been funded on our platform. One way we provide to entrepreneurs is assistance and preparation in the process of fundraising from investors. We also provide investors with our analysis of the startups, explaining to them why we chose specific opportunities and what makes them attractive in
our opinion. Post investment we are also very involved with the entrepreneurs and investors. We make
an effort to help the companies, by opening doors for them with new customers, strategic partners, and
potential investors. For the investors we provide periodic reporting every quarter which include recent
developments in the company, traction, financials and our view on how the company is doing.
VN: How many startups are on your platform now actively seeking financing?
iA: 3 right now. We typically introduce 2 opportunities a month. We are very selective. We'd rather keep
the number small and deliver on our value proposition to investors.
VN: How does the funding process work? Do investors sign up and can they invest a minimum? If so,
what is it?
iA: Yes. Accredited investors sign up and they can invest anywhere from $5k to $200k at times. The average is $20k, but all investors get the same treatment. While we have low minimums, everyone knows that the key to getting good returns from angel investing is a diversified portfolio. Therefore we recommend that our investors allocate a minimum of $100K (over time) and split that amongst a number of deals in a portfolio that they can build or that we can manage for them.
VN: What will you do with the money you have raised? Will it go toward hiring, expansion, product
iA: All of the above.
We are building a solid team of talented individuals who are going to drive the company forward. Our product roadmap is extensive, comprised of advanced features for our investors across portfolio management, secondary markets, personalized investment experience and more. We look to expand to key geographies in terms of our operations and representatives. Our infrastructure and team will serve angels from the US, Canada, Australia, South America, and China who trust us as their eyes and ears in Israel.
VN: Who are some of your biggest competitors? What separates iAngels from other similar companies?
What do you do that they can’t or won’t?
iA: There are successful investment platforms around the world. This past year we managed to invest hand in hand with pretty much everyone in the ecosystem. We look to learn from others, and at the same
time remain faithful to our model and vision, which set us apart from the rest. Our model of co-
investment and our fee structure aligns all interests as iAngels will only be successful if our angels are
successful. In addition, there is our unique access to the Israeli market as key differentiator. We are
growing iAngels to become the go-to platform for the Israeli market.
VN: What is the philosophy behind iAngels? How would you like to disrupt the space in the next five or
iA: We want to make Israel a partnership and co-investment hub, not only a start-up technology hub.
Transparency, one of iAngels' core values, will change angel investing and disrupt not only the
relationship between lead and follow-on investors but also the relationship between angels abroad and
Israeli start-ups, which have had their ups and downs as well as their successes.
We are looking to continue to build a state-of-the-art, data-driven platform which is going to completely
change the way we consume information and make investment decisions. Our platform will enable a
new generation of angel investors to learn from the best, create a make-it-your-own portfolio of
startups and establish their very own investment philosophy and track record. iAngels will have insight
and data on the entire early-stage investing landscape which it could use to create predictive models for
enhanced performance for our investors. We are very excited for the years ahead. We are here for the
VN: Why is what iAngels does valuable to its customers? What is the ROI?
iA: Our investors see a tremendous amount of value in the alignment of interest, providing full
transparency into the investment process and deal terms which are exactly the same as the lead angel.
Our angel investors with whom we invest have impressive IRRs of about 30%. Access to the best deals is
key and from that point there is a lot of work that goes into evaluating the opportunities and providing
professional service and reporting post investment.
iA: We have thousands of people in our distribution, hundreds of active investors who are engaging at
different levels, asking questions, attending webinars and making investments. We grew 200% in less
than 6 months and we are looking to grow to a thousand active investors this upcoming year.
VN: When was the company founded? Where are you headquartered?
iA: We launched our online platform late January of 2014 and started working a couple months prior. We
are headquartered in Tel Aviv, on Rothschild Avenue which - the heart of Israel Tech. We are an integral
part of the ecosystem and take the time to engage with founders, accelerators, meetups, conferences that are at the core of the industry. Although iAngels is still a young company, the lead angels aren't.
Our advisors and lead investors have been part of the start-up nation success story from the very
VN: Is there anything else I should know about the company?
iA: The founders are both women entrepreneurs with many years of experience at High Tech, Business,
Investments, M&A and Strategy roles. Coming from careers in corporate, both in the US and in Israel.
We know there are thousands of women angel investors who appreciate a women's perspective and a
style of negotiating deals that may be different from the traditional approach. They bring their
experience, methodologies, expertise to the entrepreneurial space to open the door to Israel for
investors who are excited to tap this booming ecosystem.
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