OurCrowd, an Israel-based crowdfunding group, announced on Monday that it had closed a $25 million Series B funding round, the largest investment round in the equity crowdfunding sector to date. The money will be used to expand OurCrowd’s activities in Israel and worldwide and help fund companies that OurCrowd takes on.
Crowdfunding, a tech investment model that opens up to average investors a profitable world once limited to moneyed millionaires, has quietly grown to become a major force in the venture capital world. OurCrowd, founded one year ago ago, has been a key factor in the growth of the model’s influence, raising money for dozens of companies.
As an equity crowdfunding platform, OurCrowd identifies companies seeking early stage investment and brings these opportunities to its members, who get to choose which deals to participate in via OurCrowd managed partnerships, said CEO Jon Medved. OurCrowd co-invests in all of these deals and manages the ongoing investments in the companies, including board participation.
Venture capital funds are generally for the uber-wealthy with millions to risk on what may be the “next big thing,” giving new start-ups money in exchange for equity. The investment is risky, but the rewards are commensurate: for a million-dollar contribution, a VC investor can realize a profit of hundreds or thousands of percent. Crowdfunding opens that investment venue to individuals with far less money to invest — as little as $10,000, said Medved.
Crowdfunding is not for everyone, though. “Membership in OurCrowd is limited to only those meeting stringent accreditation requirements,” Medved said. “Further, deals being funded are kept confidential and are not disclosed to the general public until complete,” said Medved, adding that OurCrowd was fully compliant with government regulations on investment recruitment. “With completion of our initial platform funding round and 12 new company deals, we have emerged as a leader in the increasingly competitive equity crowdfunding space.” Investors in OurCrowd projects are required to have at least $1 million in liquid net worth or incomes over $200,000 per year.
In addition to its own $25 million Series B round and its February 2013 $5.5 million Series A funding round, OurCrowd has raised $43 million for its 36 portfolio companies from accredited investors in 26 different countries. OurCrowd is expanding its dealings internationally, with four of its last ten equity crowdfunding deals for companies based abroad. Portfolio company round sizes have grown as well, from several hundred thousand dollars per deal to a new high of over $3 million in a single deal. Eighteen portfolio companies have raised more than $1 million each through OurCrowd’s platform.
“We are delighted to have closed this major funding milestone for OurCrowd,” Medved said. “As we look back on our first year since launching in February 2013, we are gratified by the support of our global community of 4,000 accredited investors, our talented group of entrepreneurs and the 36 portfolio company teams. This additional funding will allow us to extend our global leadership in equity crowdfunding for early stage companies.”
Click below for a video of Jon Medved discussing OurCrowd: