The AICC recently had a rare treat for its members.  Jonathan Medved was invited to introduce a new innovative way in which accredited investors can pull small amounts of money into promising Israeli startups. Medved is one of Israel’s most well-known venture capital entrepreneurs and was prominently mentioned in the book “Start Up Nation.”  He has been deeply involved with more that 100 startups, 12 of which achieved valuations of at least $100 million. Some of the companies in which he had a significant impact include: Vringo, a leader in mobile social applications; Israel Seed partners, a venture capital fund; Compugen, develops bioinformatics hardware; Business Layers, Broadlight, Xtellus and Answers.com.

What is Crowd Funding

In general terms, crowd funding is a process by which an entrepreneur will place some information about an investment on a website and then request that investors send money. This is a largely unregulated process and situations can range from responsible to totally insane. Many abuses with crowd funding have already arisen. Unless you have significant knowledge and confidence in the promoter, you should be highly skeptical of sending money to someone you don’t know.

Historically, it has been very difficult for outside passive investors to participate in the dramatic returns earned by Israeli startups. Usually these opportunities are limited to hedge funds, pension funds, very wealthy individuals and institutional investors.

The “OurCrowd approach” makes these startup investment opportunities available to a larger audience. It is believed to be the leading crowd funding platform, with more than $27 million raised to date.
The fact that Medved, his in-house team of professionals and his venture capital professionals are deeply involved, should provide investors with great comfort.

In all business ventures, integrity, experience and competence are key qualities. It appears that the OurCrowd approach incorporates these key traits.

The OurCrowd Team

Medved’s efforts are supported by a strong, experienced and highly talented, in-house team of 12 venture capital professionals. The firm is also able to draw upon the skills of five venture capital partners. Visit OurCrowd’s website to read about each individual’s background.

The Process

If you would like to investigate this process further, visit OurCrowd.com. On the website, you must complete various documents to certify that you know of, and have the resources to handle, the risks associated with venture capital investments. Once these documents are accepted by OurCrowd, you are considered an accredited investor and you can view details on current and upcoming opportunities.

Corporate Presentations

At the meeting with Medved, three investment candidates were introduced, including Surgical Theater and Highcon. Alston – Bird and Habif, Arogetti & Wynne were the primary sponsors for the evening’s events.

Surgical Theater

The company has developed an innovative solution that combines the science of flight simulation with advanced CT/MRI technology. Their surgical rehearsal platform converts a patient’s scanned CT/MRI image into a 3D model that responds to a surgeon’s actions in a manner similar to real life surgery. The company is the only one with an FDA cleared rehearsal platform for cerebral and spinal procedures. They have had early sales to the Mayo Clinic, Mt. Sinai and UCLA, among others.

Highcon

This company’s goal is to revolutionize the packaging industry by incorporating digital techniques that would offer faster turnaround, lower overall costs, wider applications and a lower carbon footprint. The company’s management team is comprised of some of the printing industry’s leading innovators with experience at Landa, Proctor & Gamble, Indigo and VIM Technologies.

Due Diligence

OurCrowd has stated that they have a very intense screening and due diligence process which, among other things, includes:
• Very wide screening to generate candidates for further review.
• Macro analysis of industry trends.
• Analysis of niche markets.
• Background of senior management.
•Verification of product/service effectiveness.
Once a transaction has been funded, OurCrowd has the responsibility to monitor the its activities and to provide investors updates. For their services they receive modest ongoing fees with the bulk of their compensation dependent upon a successful transaction.

Readers wishing to learn more about this capital raising process should visit the following websites:
www.ourcrowd.com
www.AICCSE.org
and Google Jonathan Medved

A Different “Our Crowd”

“Our Crowd”: was also the title of a tremendous book written in 1967 by Stephen Birmingham that tells the History of the Great Jewish Families of New York, including Lehman, Goldman, Sachs, Loeb and Kuhn. Many of these people became the basis of powerful and wealthy Wall Street investment banking firms. I would heartily recommend the book to young readers.

Important Disclosure

This information in this article describes a unique method of raising capital for small, high-risk venture capital startup companies. It is strictly for information purposes and does not constitute a recommendation or solicitation. Any reader, who seeks to take this process further, should conduct their own thorough due diligence effort and may wish to utilize the services of a CPA, lawyer or investment professional.

In the interest of full and fair discloser, I must disclose that I recently made a small non-material investment in one of the OurCrowd startups. Also, I have not received any form of direct of indirect compensation for preparing this article.

Al Shams is a Sandy Spring resident, a former CPA and an investment professional with more than 36 years experience.

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