Fintech Friday: OurCrowd – bringing venture capital investments to the public
29/01/2021
Perspective
OurCrowd CEO Jon Medved spoke with Efma’s Boris Plantier about how his company has provided everyday investors access to a previously off-limits asset class: venture capital.
What led to the creation of OurCrowd?
OurCrowd was established in order to democratize access to the venture capital asset class; a vitally important part of the investment landscape that accounts for much more than the public markets, but in which most people are unable to invest directly. Today, with startup companies creating huge amounts of value and driving stock markets to record highs after they go public, it has become more important than ever before for investors of all kinds, both individuals and institutions, to access these investments when companies are still private.
Due to the fact that companies have access to so much private capital from venture capital funds, they are delaying their IPOs until they are valued in the billions of dollars. This has created the unicorn phenomenon of more than 600 companies worldwide now worth over a billion dollars and still private. However, no matter how strong venture capital has become through traditional funds, the vast majority of individuals and institutions do not really have good access to this asset class and that’s why we set up OurCrowd. So far, we have received $1.5 billion in investor commitments for 250 portfolio companies and 25 different funds, and this is only the beginning. We hope to power a global network of investors and entrepreneurs who will drive further innovation throughout the next decade, when technology will become the major factor in the world’s economy.
Could you present OurCrowd's offer?
OurCrowd allows individuals and institutions to choose their own venture fund and/or individual company investments the way that they would invest in ETFs, mutual funds, or single public stocks. We do this for the private market of companies that have not yet reached the public market. Companies that are offered on the OurCrowd platform are those that have passed our rigorous diligence and selection process. We set terms and pricing, invest our own capital, and then invite the crowd to join us.
We are a state-of-the-art fintech platform. Investors can simply click on the site and complete their investments online. We manage these investments in these private companies by sitting on company board of directors, by providing strategic value to the companies in terms of governance, strategy, introductions and assistance in raising more capital as well as getting to an exit. This added value that we provide through mobilizing the extensive connections and capabilities of our 69,000-person crowd allows us to access some of the most interesting deals in the world of venture capital. In fact, in 2019 and 2020, we were involved in the two highest-performing deals on the New York Exchanges – Beyond Meat in 2019 and Lemonade in 2020 – both OurCrowd portfolio companies where hundreds of our investors were able to access these promising deals when they were still private.
What's coming next for OurCrowd?
OurCrowd is busy at work further expanding our global footprint. We have been very active in building our business in the Gulf Region following the historic Abraham Accords between Israel and its Arab neighbors. We are the first Israeli financial institution to hire a senior Emirati to open up operations in the Gulf, and we signed a $100 million initial framework deal with the Phoenix/Al Naboodah Group for investment. In addition, we just announced a $60 million investment in OurCrowd from the ORIX Corporation of Japan. Together with ORIX, we plan to further expand our already significant activity in the critical Asian market. We expect to do similar things in Europe and Latin America as we continue to grow our business and provide strong deal flow. We are offering 100+ deals a year on our platform, as well as new funds and new financial products, giving tens of thousands of investors democratic access to the venture capital asset class.
OurCrowd was established in order to democratize access to the venture capital asset class; a vitally important part of the investment landscape that accounts for much more than the public markets, but in which most people are unable to invest directly. Today, with startup companies creating huge amounts of value and driving stock markets to record highs after they go public, it has become more important than ever before for investors of all kinds, both individuals and institutions, to access these investments when companies are still private.
Due to the fact that companies have access to so much private capital from venture capital funds, they are delaying their IPOs until they are valued in the billions of dollars. This has created the unicorn phenomenon of more than 600 companies worldwide now worth over a billion dollars and still private. However, no matter how strong venture capital has become through traditional funds, the vast majority of individuals and institutions do not really have good access to this asset class and that’s why we set up OurCrowd. So far, we have received $1.5 billion in investor commitments for 250 portfolio companies and 25 different funds, and this is only the beginning. We hope to power a global network of investors and entrepreneurs who will drive further innovation throughout the next decade, when technology will become the major factor in the world’s economy.
Could you present OurCrowd's offer?
OurCrowd allows individuals and institutions to choose their own venture fund and/or individual company investments the way that they would invest in ETFs, mutual funds, or single public stocks. We do this for the private market of companies that have not yet reached the public market. Companies that are offered on the OurCrowd platform are those that have passed our rigorous diligence and selection process. We set terms and pricing, invest our own capital, and then invite the crowd to join us.
We are a state-of-the-art fintech platform. Investors can simply click on the site and complete their investments online. We manage these investments in these private companies by sitting on company board of directors, by providing strategic value to the companies in terms of governance, strategy, introductions and assistance in raising more capital as well as getting to an exit. This added value that we provide through mobilizing the extensive connections and capabilities of our 69,000-person crowd allows us to access some of the most interesting deals in the world of venture capital. In fact, in 2019 and 2020, we were involved in the two highest-performing deals on the New York Exchanges – Beyond Meat in 2019 and Lemonade in 2020 – both OurCrowd portfolio companies where hundreds of our investors were able to access these promising deals when they were still private.
What's coming next for OurCrowd?
OurCrowd is busy at work further expanding our global footprint. We have been very active in building our business in the Gulf Region following the historic Abraham Accords between Israel and its Arab neighbors. We are the first Israeli financial institution to hire a senior Emirati to open up operations in the Gulf, and we signed a $100 million initial framework deal with the Phoenix/Al Naboodah Group for investment. In addition, we just announced a $60 million investment in OurCrowd from the ORIX Corporation of Japan. Together with ORIX, we plan to further expand our already significant activity in the critical Asian market. We expect to do similar things in Europe and Latin America as we continue to grow our business and provide strong deal flow. We are offering 100+ deals a year on our platform, as well as new funds and new financial products, giving tens of thousands of investors democratic access to the venture capital asset class.
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