In just over a year, Israeli crowdfunding platform OurCrowd has gone gangbusters, raising $43 million funding for 36 companies from more than 4,000 accredited investors in 26 countries. It’s a platform open to any accredited investor (someone who earns at least $200K per year or who has a net worth of at least $1 million), but requires a minimum commitment of $10K per investment.
Jon Medved, who co-founded the platform with Steven Blumgart, explains that investors previously had essentially two options if they wished to break into the Israeli startup scene: either join a venture fund and cede control over your funds to the manager or retain your freedom and basically rely on your connections. Therefore, they decided to develop a platform to help prospective investors enter the market and make informed decisions.
One of the most notable aspects is that, in addition to vetting and negotiating deals with the startups in their portfolio, they invest along the crowdfunders on every deal. Several weeks ago, OurCrowd closed a $25-million Series B, which follows on the $5.5-million Series A that it raised in February 2013. The company raises revenue by charging each investor a 3% management fee (for up to 4 years) and then takes 20% of the profits from each deal.
Through based in Israel, they are not exclusively focused on the region. The company tells me that 4 of their last 10 deals have actually been with U.S.-based startups and a look at their portfolio tells me that their best-funded company thus far has been Boston-based BioCatch ($3.4 million), which offers behavioral authentication and threat detection for mobile and web apps.
Competitors in this market include San Francisco-based CircleUp and Venice, CA-based Crowdfunder. CircleUp, which requires prospective (accredited) investors to contribute a minimum of $1K, has helped raise more than $30 million for its portfolio and raised $23 million of its own to develop its service. According to the New York Times, their model is to make vetted deals in small retail and consumer-businesses in order to avoid poor investments.
Crowdfunders, which also requires a minimum investment of $1K, has facilitated $102.5 million in deals with more than 47,5K investors for 9,400+ startups. In February, Crowdfunders doubled its own backing to $2 million. Thus, while OurCrowd launched later, it already acts as a strong competitor to the 2 California-based platforms.