The prolific Israeli equity crowdfunder OurCrowd has unveiled a new Pre-Series A venture fund.
The “OurCrowd First” fund has been launched in response to calls from amongst the platform’s 9,000 accredited investors for more in the way of access to early-stage, Pre-A startups. To date, average deal size on the OurCrowd platform has been pretty high – standing at millions of dollars per deal, which in part explains why the platform was able to surpass the $100m mark in cumulative funding in January of this year. But this hefty average ticket size has also raised a barrier to the facilitation of earlier-stage equity investment opportunities. Jon Medved, Founder and CEO of the platform, explained:
"Our investors have asked for more access to earlier stage deals, which have been hard to do until now on OurCrowd, given the rapid growth of our platform and our average deal sizes of millions of dollars.”
OurCrowd First is the platform’s solution. The fund will provide up to $500k a pop for a carefully curated selection of startups. The fund will carry $10m of firepower, an amount that is being raised through the OurCrowd platform. OurCrowd General Partners will be contributing $1m, leaving the crowd to cover the remaining $9m. That money will be spread over a minimum of 20 startups. OurCrowd’s accredited investors will need to commit a minimum of $50k each in order to participate in the fund, which will in turn provide them with exposure to a diversified portfolio of seed-stage companies.
The Fund will be managed by OurCrowd General Partners Eduardo Shoval and Yori Nelken. The pair boasts an impressive track record in early-stage company construction and investment. Mr. Nelken provided more colour as to the value that the OurCrowd First fund will bring to both investors and entrepreneurs:
“Entrepreneurs want more than just checks, and we will roll up our sleeves and work closely with the early stage companies in our portfolio. Providing money to startups is only one part of the equation. We will help each of our companies, to build their management teams, construct, explore and test go-to-market strategies and introduce them to our full ecosystem of support, mentoring and business networks. It’s our secret sauce for generating winning companies.”
The fund is launching with a portfolio that already includes 6 companies, hailing from 5 distinct industries (the internet of things, energy, mobile infrastructure, 3D printing and digital radiology). OurCrowd First has invested in each of these companies alongside such prominent backers as Softbank, Khosla Ventures, Salesforce CEO Marc Benioff and Artis Ventures. Two of these seed investments have already converted into sizable Series A rounds.
Whilst on the one hand this shift is about opening up access to fledgling businesses, it also enables OurCrowd’s investors to take a more passive approach to investment, should they wish to. To some extent this reflects the shift that has taken place within the P2P lending space, within which many of the platforms now operate a kind of “fund management” model, rather than allowing lenders to hand select investment opportunities on a case-by-case basis.
Of course, the fund management structure only works if private investors back the managers. The success of the OurCrowd First $10m fundraise – which is, as mentioned, being hosted by the OurCrowd site – will serve as a good indication of the trust that the platform has established within its investor community.