iAngels helps little guy make ‘me too’ investments

To succeed in business, follow the money, the old adage goes – and to make money in high-tech investing, one should follow successful high-tech investors.

That’s the philosophy behind Israel’s newest crowdfunding phenomenon, iAngels, which in just one year of existence has raised tens of millions of dollars for Israeli start-ups – including more than $2 million for itself.

“We decided on this model of funding when we analyzed how well many angels were doing investing in Israeli start-ups,” said Shelly Hod Moyal, who co-founded the platform with partner Mor Assia. “We wanted to enable investors who don’t have a lot of money to have an opportunity to get involved in Israel’s start-up success. Our iAngels platforms connects between angels and investors, based on the kinds of investments and the number of investors each feels comfortable with.”

According to Moyal and Assia, Israel is a victim of its own success, with over 4,000 active start-ups, out of which over 2,000 are funded. Those companies need funding to develop their ideas into products and services, but even though the venture capital landscape in Israel has grown at a healthy clip over the last two decades, the supply of available funding has not kept pace. Many venture capital funds have experienced challenges in raising additional capital, the funding capacity of local angels is limited, and the Israeli early stage landscape is by and large inaccessible to private investors. As a result, there is a significant valuation difference between Israeli seed rounds and those in the US or Europe, with seed rounds in the latter typically twice the valuation of those in Israel ($4 million abroad versus $2 million in Israel).

With angels outside Israel inundated with requests for funding in their own countries, the only way to increase the pool of money for investment is to increase the number of investors – and that’s where crowdfunding, and iAngels, comes in, said Moyal.

“Our goal is to open the Israeli early stage market to a global community of private investors. For the first time ever, private investors can finally coinvest with Israel’s exclusive angel network in some of the most promising early stage companies to come out of Start-up Nation.”

As part of an investment “team,” small investors – the minimum to get into an investment is $5,000, said Moyal, although the average iAngels investors puts $20,000 into a project, while some have invested up to the $200,000 limit – team up with a lead angel, who puts up a far more substantial sum. All of the lead angels that iAngels works with, the company says, have extensive industry experience and a proven investment track record.

“All investments are completely transparent, so the investor knows what is happening with their money at any time,” said Moyal. The number of investors that can go in on a project depends on how much money is being raised, who the investment partners are, how much the individual investors are contributing, and how comfortable the angel feels with “the crowd.”

Last month, iAngels used its own platform to raise money for itself, making iAngels the 15th company that has raised funds on the iAngel platform. The $2.25 million seed round was led by Roman Abramovich’s fund, Millhouse Capital. Angels, including Abramovich, invested $1.25 million in the company, while crowdfunding investors investors provided the other million dollars – within two days of the offering.

And the angels themselves are big fans of iAngels. “iAngels provides unparalleled access to Israel’s best deal flow,” noted Gigi Levy Weiss, iAngels Advisor and one of Israel’s most successful angel investors. “The company’s unique model of investing alongside Israel’s top angels guarantees the quality of the selected companies and helps accredited investors worldwide beat the odds and make money from this coveted asset class.”

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