Crowd-sourcing investment platform OurCrowd raises $5.5m.

Israeli businessman Jonathan Medved's company works as a sort of matchmaker between start-ups and investors.

Jonathan Medved 370 (photo credit: courtesy)
Jonathan Medved 370
(photo credit: courtesy)
Time seems to be moving faster for Israeli businessman Jonathan Medved.
It took him 22 years to make aliya from San Diego. From that time, it took 11 years to found, sell and move on from his first company, MERET Optical Communications.
He spent another 11 years building up Israel Seed Partners, a venture-capital fund he founded, to a $262 million fund. It only took him four years from the time he cofounded mobile software company Vringo to take it public and another two years to move onto his current project, OurCrowd.
It should come as little surprise, then, that it has taken OurCrowd only a matter of months to become one of Israel’s most active funds, closing 12 rounds of capital raising for Israeli start-ups within just three months of its Web launch and gathering $5.5 million in Series A investments in the process.
The fund is sort of start-up, applying the concept of crowd-sourcing to investing.
“It’s sort of an amalgam, a cumulative effect of being start-up, angel investor, public CEO and venture capitalist,” Medved says.
The company works as a sort of matchmaker between start-ups and investors. It researches and puts its own money into promising young Israeli companies, then allows accredited investors (defined in the US as controlling over $1m. in capital, or in Israel as controlling over NIS 12m. in capital) to pick and choose from the companies, pouring in minimum investments of $10,000.
The idea, inspired by crowd-funding platforms like Kickstarter that allow numerous small investors to fund ideas posted by entrepreneurs, is an innovation of its own.
“If you look around and see which businesses have not yet been disrupted by the Web, there are very few,” Medved says. “Turns out that one that hasn’t changed at all is how start-ups get their funding. If you think about it, it’s really super weird because start-ups are the agents of disruption.”
One thing the Web is good at, he says, is hooking up products (in this case start-ups) and customers (investors).
There seemed to be plenty of demand from the investor side. In his trips and travels around the world, Medved says, he constantly encountered people interested in investing in the “start-up nation” but lacked a medium through which to do it. Without huge amounts to invest in a venture-capital funds, and not wanting to pick stocks in already publicly traded companies, the would-be investors made do with simply giving Medved their business cards and hoping for some good advice.
“I’ve got shoe boxes filled to the gills with these cards,” Medved says.
Then, just last year, it came together.
“I could select the deals, do due diligence, put my own money and my own management’s money in it and then go to the shoe box of all these people I’ve met in my career and say, ‘Join me!’” Investors have to make their own decisions on which companies to fund and take their own risks.
“The reality is a lot of these are going to go south because we’re talking about start-ups, so you have to have a portfolio, and we’re pushing that,” he says. “But I’m personally putting my own money in each of the deals that we have here. We’re putting our money where our mouth is.”
The fund does have a handful of competitors, such as FundersClub and AngelList in Silicon Valley, but OurCrowd is specific to Israel and is giving them a run for their money.
Looking to the future, as the company continues to aggregate investors, Medved hopes to use the platform as a social network of sorts, in which the investors can serve as a resource to help the start-ups expand.
“Not only are we raising money for a cool set of companies in a new way,” he says, “but by building this community and unlocking the power of crowds, we can give them an advantage in the market.”
Given Medved’s record, it shouldn’t take long.