By Sheryl Rowling
SAN DIEGO — John Medved, a native of the Point Loma neighborhood, came up with a pretty unique idea that grew into a major success. In fact, it is so successful that he was recently awarded the ‘Bonei Zion’ Prize for his contribution to the State of Israel in a ceremony at the Knesset.
(Before I continue, I need to say that nothing in this article is meant as investment advice nor is this article a recommendation or endorsement. Be sure to consult with your own investment advisor prior to making any investments.)
Out of hundreds of nominations from countries including Canada, Australia, the U.K., South Africa and New Zealand, Medved was one of six to be chosen for the prestigious award in the field of “Entrepreneurship and Technology.” The award was based on his cool idea: “OurCrowd”, a crowd funding site providing an opportunity to invest in Israeli start-up companies. It’s true that there are other crowd funding sites, such as Kickstarter or PledgeMusic. However, OurCrowd differs from these sites in two major ways:
The OurCrowd minimum investment is $10,000 for any particular project. Many investment opportunities on the other sites can be as low as five dollars.
With OurCrowd, the investors actually get an equity interest rather than merely a reward such as a t-shirt or gadget.
OurCrowd is, according to Forbes (August 13, 2013), “one of the largest crowdfunding organizations on the planet” having raised over $130M for 70 portfolio companies since its launch in February 2013. Bloomberg Business week said in the May 7, 2015 edition that “OurCrowd is hands down the most successful equity-crowdfunding platform in the world right now.” TheStreet.com described OurCrowd as “Crowdfunding for Real Investors.”
What led Medved to become the founder of OurCrowd? Although born in San Diego, he has lived in Israel for 34 years. During this time, he ran several start-up companies and gathered the experience to identify and assist potentially successful new companies. In founding OurCrowd, he wanted to provide a platform to enable a broad base of investors to support and own shares in Israeli start-ups. This could ultimately benefit the investors, the Israeli entrepreneurs, Israel and (based on the product) possibly the world-wide community.
According to Medved, “Investments in start-up companies has typically been limited to ultra-high net worth individuals, banks and pension funds. The average ‘well off’ person doesn’t have this opportunity – unless they have a connection.”
To invest in OurCrowd, the SEC requires qualification as an “accredited investor”, meaning each investor must have a net worth of at least $1 million (not counting home equity) or have annual income of at least $250,000. According to Medved, 10 million households in America meet this criteria.
With a minimum investment of $10,000 per project through offshore partnerships, investors can build a diversified portfolio of ten companies with $100,000. As companies become successful, they “go public” on the U.S. NASDAQ stock exchange. A recent success was Rewalk, a company that designed and built the first exo-skeleton giving paralyzed people the ability to walk. Medved stated that the investors made two to three times their money in about one year.
For its share, OutCrowd gets a management fee of two percent a year as well as cost reimbursement. The company also gets 20 percent of the profit after the investors are repaid in full, then an additional 25 percent after investors have made five times their original investment.
For more information on OurCrowd, go to www.ourcrowd.com or contact their San Diego office at americas@ourcrowd.com.
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Sheryl Rowling is a certified public accountant, personal finance specialist, and principal of Rowling & Associates. She may be contacted via sheryl.rowling@sdjewishworld.com