All grown up, crowdfunding brings in $20m investment for mPrest

Crowdfunding, until now the scraggy little brother of “real” venture capital investing, is all grown up and ready to take its place at the investment table, as is clear from the company it has begun keeping. No less a company than mPrest, the creator of Israel’s Iron Dome missile defense technology, has opted to raise money in a new round with Israeli crowdfunding pioneers OurCrowd.

“They have a huge network of potential investors and customers that we feel can help us more than a typical venture capital fund,” said CEO Natan Barak Monday. “For a company like ours it is not a typical move, but one that we feel is good for us.”

This “huge network” has netted mPrest a huge crowdfunding-inspired investment. In an announcement coinciding with a special summit dedicated to crowdfunding, mPrest said it had raised $20 million in a Series A investment round, led by GE Ventures, the venture arm of GE, and OurCrowd, one of the world’s leading equity crowdfunding platforms.

It was the biggest investment round ever raised via crowdfunding – and bigger than the large majority of venture capital raises. “mPrest is an exciting company with significant revenues, a real track record and a very promising future,” said Jon Medved, OurCrowd CEO. “Just as its Iron Dome technology has played an invaluable role in protecting millions of citizens, we are confident that mPrest’s real-time platform will deliver enormous value to its large industrial customers for years to come.”

President Barack Obama and Prime Minister Benjamin Netanyahu inspect an Iron Dome missile defense battery at Ben Gurion Airport on March 20 2013 (photo credit: Nati Shohat / FLASH90)

That mPrest is not alone in seeing crowdfunding as a legitimate – even preferred – form of investment was evident Monday at the second annual OurCrowd Summit in Jerusalem. Despite extremely inclement weather, the Israel Convention Center was filled to the rafters with thousands of investors, executives, and entrepreneurs who see the opportunities in the new, far more open fundraising platform that crowdfunding offers both investors and companies seeking to raise funds.

Crowdfunding, of course, is the system whereby investors pool resources to reach the sum a start-up or more mature firm is seeking in a funding round. A crowdfunding platform essentially creates a venture capital fund — not with just a few rich members’ money, but with funds supplied by hundreds or thousands of individuals.

Recent rule changes in the US and other countries allow accredited investors (who have at least a specific minimum net worth) to join a fund that lets them invest relatively modest sums in promising tech companies, instead of the millions of dollars that angels or venture capital funds invest in tech companies. While there was some debate in the US Securities and Exchange Commission about whether crowdfunding was a viable investment method – or a safe one, given that shysters could pose as entrepreneurs and relieve widows, orphans, and other vulnerable investors of their life savings – the numbers prove the case for crowdfunding, according to Medved.

Those numbers were in evidence at Monday’s event, where over 2,000 people gathered in the biggest tech investment event ever held in Jerusalem. On the agenda were discussions on how crowdfunding could help entrepreneurs in areas such as medical technology, environmental technology, cyber-security, Internet of Things, and how to build billion dollar companies, among others. Attending the event were a panoply of executives from large multinationals like GE, Philips, Coca Cola, Honda, and EZChip, as well as top VC investors, including Canaan Partners, Magma Ventures and Jerusalem Venture Partners. Also attending were dozens of Israeli start-ups, including some that have benefitted from crowdfunding, and others that have not.

In just two years, OurCrowd has invested over $200 million from accredited investors in 91 Israeli tech firms, “making us one of the largest investors in the Israeli tech ecosystem and one of the largest equity crowdfunding platforms globally. We are driving the democratization of venture capital, opening the door to tens of thousands of accredited investors who want to invest in the next generation of tech leaders,” said Medved.

Opening those doors did wonders for mPrest, said Barak. “There is a great commercial opportunity for our technology. The infrastructure we developed for defense, based on big data, vision technology, and other tech disciplines will allow us to deploy systems for a wide variety of customers. The enormous promise of the IoT relies on smoothly integrating disparate systems, sensors and disciplines while managing the exponential growth of connected devices. Together with our new and existing partners we are committed to growing into a world leader in technology for the increasingly connected industrial world.”