Israel’s angels in America

Israel’s angels in America

Federation forum to focus on investment and innovation in Start-Up Nation

You don’t have to watch Start-up Nation from the sidelines. You can put down your money and invest in the next great Israeli start-up company.

That’s one of the messages of next week’s “Israel Innovation and Investment Forum” at the Jewish Federation of Northern New Jersey. The forum will bring several people involved with Israel’s investment and start-up scenes together to talk about the process of investing in Israel and about some of their favorite companies.

“It’s becoming more and more clear that Israel is not just a place we give money too,” Lee Lasher of Englewood said. Mr. Lasher is one of the evening’s chairs. “It’s a really strong economy,” he said. “There are so many exciting growth companies to invest in.”

The federation’s innovation and investment forum grew out of a trip to Israel Mr. Lasher helped organize for his synagogue, Congregation Ahavath Torah in Englewood, a few months ago. One day of the trip, dubbed “Start-Up Nation Day,” took the visitors to a high-tech incubator in Tel Aviv.

“It was almost like ‘Shark Tank,’” he said. “We had meetings with exciting young entrepreneurs from a bunch of Israeli companies. People didn’t want to leave.

“People walked away floored to discover that Israel is apparently one of the leading automotive suppliers in the world, without making cars, because they make all these other things related to cars — the technology, the cameras, some of the parts. It was pretty amazing.”

That got people interested. “They asked me, “‘how do we invest in Israel?’”

And that question led to Thursday’s panel.

Jon Medved

For Mr. Lasher, the question of how to invest in Israel was answered by Jon Medved, the founder of OurCrowd, which enables people to invest in Israeli companies before those companies go public on the stock exchange. Mr. Medved will be one of the speakers at the panel.

Mr. Medved said that OurCrowd now manages half a billion dollars worth of investments “and is doubling every year. We hope to bring in another $500 million in 2018.”

OurCrowd has invested in 130 companies since it started in 2013. Eighteen of them “had their exit” — meaning a larger company bought them.

One of those companies was Argus Cyber Security, which protects cars from hacking. Last week, a German firm bought the Israeli company for a reported $400 million.

“The leadership of Israeli technology is now stretching from the traditional bastions of Israeli technology, like cybersecurity and medical devices and agriculture, to include autonomous vehicles and cars, machine learning, virtual reality, and digital health,” Mr. Medved said.

“There are lots of fields where Israel is not just an important place, but is emerging as one of the top one or two or three,” he said. “Israel is just booming in an unprecedented way.

“Take autonomous vehicles. We have ten different investments in companies doing that.”

OurCrowd owes its existence to the 2012 JOBS Act, which changed the rules for how companies raise money. It used to be against the law for companies to solicit investment publicly before the companies were ready to go public and fulfill all the SEC filing regulations.

The new law lets companies solicit investment publicly while they’re still private — though only from investors wealthy enough to afford the risk. That means having a million dollars in wealth, not including your house. “The good news is that somewhere between ten and fourteen million households in America meet that criteria,” Mr. Medved said.

Lee Lasher

But before the JOBS Act, all the solicitation would have to be private — precluding the kind of website that OurCrowd uses to raise the investment, or even speaking at a public event like the innovation forum.

OurCrowd lets investors put $10,000 or more into companies looking to raise money. Right now, 10 companies are seeking funds on OurCrowd’s platform.

“We’re giving people a chance to invest in these startups when they’re still private,” Mr. Medved said. “Startups wait a long time now until they go public. The amount of money you can get as an outside investor is limited. In the old days, when Oracle or Amazon went public, you could have made 500 times your money. Today, when companies like Uber or Facebook go public, you can make a couple times your money. Who is making 500 times? The guys who get involved with the private company. That’s what we’re doing.”

OurCrowd has 20,000 investors on the site, from 110 different countries. While originally it focused only on Israel, today 30 percent of its investments are elsewhere, including companies in China and India and the United States.

“The great surprise is that the guys who invest with us are very often not just passive investors,” Mr. Medved said. “We get people to add value. Every individual either has another investor or a cousin at a university that needs a job, or some other connection. It can act as a force multiplier.

“This is the next wave of the Israel-diaspora partnership,” he continued. “We’re talking about five billion dollars now being invested annually in Israeli startups. That’s more than all the charity, all the U.S. military aid. It’s a big chunk of money. It’s very productive in building the Israeli economy, creating jobs, pushing our country forward.”

Shelly Hod Moyal also will speak at the federation panel. She was born in the United States, grew up in Israel, moved back to the United States after her army service, worked on Wall Street, and then moved back to Israel, where she worked for Goldman Sachs. Four years ago she co-founded iAngels, which, like OurCrowd, enables investors to invest in early-stage Israeli companies. It is a smaller enterprise — it hasn’t yet reached the $100 million level — and tends to invest in younger companies.

“We saw a lot of people interested in accessing Israel and being able to invest in Israeli companies,” Ms. Moyal said. “We thought we could bring these opportunities to them in a way that was professional and transparent. It’s an institutional approach to angel investing in Israel.”

These investments are called angel investing, she said, “because many times it’s the initial capital that gives a company the kiss of life.”

Investing at the very beginning offers more rewards — and also more risks.

Shelly Hod Moyal

“You’re investing in a very early business when it’s just an entrepreneur and maybe a couple of team members,” she said. “It’s different from investing where there’s revenue and income. It’s appropriate for people who are excited by the fact of coming in early, enjoying the huge potential upside, and being part of the journey of being an entrepreneur.”

She said that iAngel “spends a lot of time with entrepreneurs, building relationships and looking for opportunities. We see about a hundred opportunities a month. We usually invest in one a month, one every two months. We’re very selective.”

She’s very excited by the potential of “self-driving cars and transportation on the one hand, and on the other the blockchain. We have a lot of data analytics companies, and a lot of enterprise software, fintech, and artificial intelligence.”

One company she’s excited by is Arbe Robotics. “They invented a smart radar system for an autonomous vehicle,” Ms. Moyal said. “ There’s a lot of interest from Silicon Valley and Europe.”

In April, iAngel was the first, or seed, investor in the company, putting in $2.5 million. Last week, the company took another $9 million in investment from five investors, including both iAngel and OurCrowd.

Wait. You’re not a millionaire? You say you’re not an accredited investor?

And yet you want to invest in Israel?

Don’t worry. The Israel Innovation and Investment Forum has room for you too.

Panelist Steven Schoenfeld is the founder of Blue Star Indexes, which created two different indices tracking Israeli stocks. Blue Star has teamed up with companies to offer Exchange Traded Funds that track the index. One fund, with the ticker symbol ISRA, tracks the Israeli market. The other, ITEQ, is focused specifically on high tech companies. Individual investors can invest in those companies through their brokers.

“The response has been incredible,” Mr. Lasher said. The federation closed registration. The forum sold out.

But don’t despair if you didn’t RSVP in time.

“We’re hoping we can do this a couple of times a year,” Mr. Lasher said.

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