Israel’s Top 4 Equity Crowdfunding Platforms in 2021

Quick Summary - Israel has several equity crowdfunding platforms (CFP) - and we’ll be looking at four of them. We’ll also take a quick look at Israel’s first and largest reward-based CFP and how it can work for startups, too.

Israel’s Top 4 Equity Crowdfunding Platforms in 2021

We know running a startup is tough. Not everything, but a lot of that relates to funding. It’s always good to have some extra funding options.

7 mins read

Equity crowdfunding in a nutshell

By now, most everyone is familiar with reward-based crowdfunding and crowdfunding platforms like Kickstarter and Indiegogo. Unlike them, equity crowdfunding lets everyday people invest into your startup – though actual policies vary from one platform to the next. If your startup succeeds, the early adopters who backed you will directly benefit financially.

If you’re not familiar with crowdfunding, our Crowdfunding Guide for Startups in 2021 will help bring you up to speed. It references some sites that can be good for international crowdfunding projects.

Equity crowdfunding is much more complex than setting up your typical Kickstarter campaign. As with any investment activity, equity crowdfunding is subject to securities laws which can vary by country. Equity CFP’s keep a handle on the legal matters and conduct thorough due diligence evaluations of any startups they accept into their programs. Nevertheless, it’s recommended to consult with a lawyer to evaluate the impact equity crowdfunding can have on your startup and before signing any agreements.

Equity Crowdfunding Benefits

So, we’re still watching the whole Gamestop “situation” unfold. Complex as it is, one investor managed to get a sizable stake in the company’s stocks – and started pulling shenanigans and shorts to get more control. Only, well – regular people jumped in and gave a big middle-finger to the hedge fund establishment. Though that’s separate from crowdfunding, it takes aim at why startup founders can be reluctant to let equity in their company get concentrated in the hands of one or a few investors.

The benefits of equity crowdfunding are quite extensive:

  • Ability to reach regular people, 18 or older, to invest in your company in its earliest stages (ground floor opportunity). The size of their investments are usually much smaller than typical to Angel/VC firms.
  • Many equity crowdfunding platforms charge a fee for investors, not the startup founders.
  • They perform a due diligence evaluation of your startup and pitch – so if you’re accepted in their program, it’s an event that you can promote across media and social channels.
  • Getting on an equity CFP inherently increases your exposure as they’ll promote your startup across the entire network – with investors of all types.
  • Having a broad base of investors makes it easier to attract additional investors.
  • Investors can provide you with valuable market research, feedback on your offering, and talk up your business as brand advocates

Israel’s top 4 equity CFP’s

Israel’s startup ecosystem is unique in many respects. That it has several equity CFP’s makes it #1 on a per capita basis – to go along with its number of startups. It only has one major reward-based CFP, underscoring again that there is limited room for scalable competition in a country of 9.3 million people.

OurCrowd

Founded in 2013, OurCrowd has three offices in Israel with its headquarters in Jerusalem. It has offices around the world including the USA, UK, Spain, Brazil, China, and Australia. It’s crowdfunding activities have raised over $120 million for 60 companies. Their fee structure is specific to investors. There appears to be no fee for startups, however they conduct a thorough due diligence examination of each project.

OurCrowd is active in a broad range of sectors: agriculture, consumer goods and services, cybersecurity, energy, enterprise, FinTech, healthcare, mobility, and more.

iAngels

This is an Angel/VC firm for early-stage, Round A and B startups that also has a crowdfunding component. Founded in 2013, iAngels focuses on nearly the full spectrum of high-tech industries, and carries a number of AI-based ventures in its present portfolio. Their fees are levied on investors, not on startups.

If a startup passes their due diligence review, the funding campaign proceeds in two stages. First, the startup will pitch to iAngels’ experienced network of investors. If there’s sufficient buy-in, iAngels then presents it to a larger network of investors who can opt-in with as little as $5k.

ExitValley

ExitValley was founded in 2014 and has raised $20 million for roughly 50 companies, for a rough average of $400k. ExitValley’s program is suited for Israeli companies seeking to raise $75k to $3 million via a time-limited (60 day) fundraising campaign.

Unlike the other CFP’s covered here, ExitValley does charge startups a 14,000 ILS ($4.3k) + VAT administration fee upfront. It also charges 10% + VAT on the total fundraising amount. These fees include setting up the legal basis for your campaign, an escrow account, and an initial marketing budget for purchasing digital media. However, they will also help you to incorporate our business.

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InvestiNation

Israel’s newest equity CFP, InvestiNation, just launched in November of 2020. InvestiNation actively promotes Israeli startups to US-based accredited investors. Their review process for startups includes a 1-3 initial orientation. If your project is interesting, they’ll spend a couple months on a due diligence evaluation of your company. Startups are encouraged to regard them as a partner and not just a funding source – as they’ll take on an active role to help refine your go-to-market plan and other areas.

InvestiNation is interested in just about every kind of tech – adtech, edtech, fintech, medtech, proptech, contech, enterprise software, and more.

Headstart - Israel’s main non-equity crowdfunding site

Established in 2011, Headstart is the first and largest non-equity crowdfunding platform in Israel. Roughly 6,500 projects have been successfully funded by 1 million supporters to the tune of $56.5 million (NIS 185 million). As with most reward-based CFP’s, you define a funding goal, decide the term of your campaign, and the perks you offer for each funding level. Headstart projects have a 63% success rate, with an average funding level of $13.8k.

They maintain an “all or nothing” reward system. If you meet your funding target, you receive all funds minus their 9% processing fee. Fail, and no money is exchanged by anyone.

Use case? Despite the low average funding level, campaigns are being run for over $200k. That’s more than suitable for validating an MVP or even staging pre-orders. It can be presumed that a majority of its supporters (and 4 million visitors) reside in Israel or are friends, family, and colleagues of people who do. On this basis, Headstart is also very attractive for developing grassroots awareness of your project.

Disclaimer

For transparency, PerceptionBox has no relationship or connection to any of the equity crowdfunding platforms referenced. Consulting with an attorney-at-law is advisable as to how equity crowdfunding can impact your business and before signing any agreements. If you decide to pursue equity crowdfunding, it is important for you to seriously evaluate which platform is best for your business. This should factor in their terms, their market position and specialization relative to the nature of your business, and the level of support they can provide you.

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