Our in-depth review compiles crucial details to help you assess whether OurCrowd is legit, ensuring you make informed investment decisions.
What is OurCrowd and how does it work?
OurCrowd operates as a platform that connects investors with a range of investment opportunities, primarily focusing on startups and venture funds. It leverages an extensive network to identify promising startups, engaging in selective, high-demand investment rounds often alongside top-tier venture capitalists (VCs).
The platform stands out due to its selection process. Every month, OurCrowd's team of investment professionals reviews between 150-200 startup companies and meets with 20-30 management teams face-to-face. Through comprehensive due diligence and negotiation, the platform selects an average of 2-3 investment opportunities each month. Significantly, OurCrowd invests its own capital in every portfolio company it backs, ensuring alignment of interests with its investor community by providing the same investment terms as institutional co-investors.
OurCrowd's investment opportunities span various sectors, including healthcare, cybersecurity, FinTech, mobility, FoodTech, and artificial intelligence, among others. Investors can filter these opportunities based on funding stage and geography, enabling a tailored investment approach. Beyond single-company investments, OurCrowd also offers access to venture debt, private equity indexes, and other alternative credit assets across multiple markets and sectors. This diversification allows investors to spread their risk across different types of investments within the private market.
To start investing with OurCrowd, the process is streamlined into three key steps:
1. Create an Account: Interested investors need to join OurCrowd by creating a free investor account, which is available exclusively to accredited investors.
2. Browse: Once registered, investors can browse through various investment opportunities, reviewing detailed due diligence material provided for each potential investment.
3. Invest: After selecting an investment, investors can contribute funds and will then receive regular news, updates, and other relevant information about their investments.
This structured approach, combined with the platform's commitment to investing alongside its community, offers a unique avenue for accredited investors to participate in startup and venture fund investments, providing a means to diversify portfolios and potentially tap into high-growth investment opportunities.
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How risky is OurCrowd?
4/5
— High RiskInvesting through the OurCrowd platform, like any venture capital or startup investment, carries significant risks. The primary risk is the potential loss of capital, as investments in early-stage, privately-held companies are inherently risky. These companies may fail to achieve their business objectives, leading to partial or total loss of the invested capital.
Market risk is another concern, as fluctuations in the broader market or specific industry sectors can negatively impact the performance of investments. Additionally, liquidity risk is a factor, given the long-term nature of these investments and the lack of a secondary market for selling stakes in startups before a liquidity event.
The performance of individual companies is unpredictable, and while high returns are possible, they are not guaranteed. The due diligence performed by OurCrowd aims to mitigate these risks, but it cannot eliminate them entirely. Investors should be aware of these risks and consider them in the context of their overall investment strategy and risk tolerance.
How liquid is OurCrowd?
1/5
— Minimum LiquidityThe liquidity of investments on the OurCrowd platform is inherently limited, as is typical with venture capital and startup investments. These investments are in early-stage, privately-held companies, which traditionally offer fewer immediate liquidity options compared to publicly traded stocks or bonds. The nature of these investments means that capital is often locked in until a company is either sold or goes public through an Initial Public Offering (IPO), which can take several years.
OurCrowd, as an investment platform, does not guarantee liquidity or offer a secondary market for the trading of its investments. This means investors should be prepared for their capital to be committed for an extended period, understanding that liquidity events depend on the success and strategic decisions of the underlying companies in which they are investing. Therefore, potential investors should consider their ability to commit capital over the long term without the expectation of quick or guaranteed liquidity.
How volatile is OurCrowd?
3/5
— Moderate VolatilityAssets on the OurCrowd platform, which primarily include investments in early-stage and privately-held companies, typically exhibit high volatility. This is due to several factors inherent to startup investing. Startups often operate in rapidly evolving markets, face intense competition, and are subject to significant operational and financial risks. Their valuations and success prospects can fluctuate widely based on product development milestones, market acceptance, regulatory changes, and broader economic conditions.
Unlike publicly traded stocks, where prices are continuously updated and reflect the latest market sentiments, the valuation of private companies on OurCrowd is updated less frequently. This can lead to sudden and significant adjustments in valuations at the time of fundraising rounds, exits, or significant business developments.
Investors should be prepared for the possibility of substantial swings in the value of their investments and understand that such volatility is a characteristic feature of startup investing. The potential for high returns comes with a commensurate level of risk and uncertainty.
What is the average rate of return for OurCrowd?
N/P
— Not Predictable ReturnOurCrowd offers investments in early-stage companies and venture funds, which inherently come with a high level of risk as well as the potential for high returns. The exact returns an investor can expect are unpredictable and vary widely based on the success of the individual companies or funds within the platform's portfolio.
Investing in startups often involves a long-term perspective, with the understanding that many startups may fail, while a few may achieve significant success, driving the overall return on the portfolio. Historical data across the venture capital industry suggests that successful investments can offer substantial returns, but these outcomes are not guaranteed and are the exception rather than the norm.
What is the minimum investment amount for OurCrowd?
$10,000
The minimum investment amount on the OurCrowd platform varies depending on the type of investment chosen by the investor. For those looking to invest in an individual company through OurCrowd, the minimum investment required is $10,000. This entry point allows investors to directly engage with and support specific startups that align with their interests and investment strategy.
For investors interested in a more diversified approach, OurCrowd offers the Portfolio Select Account. This option reduces the minimum investment to $5,000 per company, provided that the investor transfers a balance of $25,000. This structure is designed to encourage diversification across multiple startups, potentially reducing risk and offering exposure to a variety of sectors and stages.
Additionally, OurCrowd has investment opportunities in funds, which aggregate investments across a portfolio of companies. The minimum investment for participating in an OurCrowd fund is set at $50,000. This higher threshold reflects the broader exposure and managed investment strategy funds typically offer, appealing to investors looking for a more hands-off approach to startup investing while still gaining access to a curated selection of opportunities.
What is the investment time horizon for OurCrowd?
5+ years
Investments made through OurCrowd in early-stage companies and venture funds typically have a long time horizon. This is inherent to the nature of venture capital and startup investing, where the capital is locked in for a period until a liquidity event occurs, such as a public offering (IPO) or an acquisition.
The time horizon for such investments can range from several years to a decade or more. This extended period is necessary for startups to develop their products or services, achieve market penetration, and attain financial stability or growth that would lead to a successful exit.
Investors considering OurCrowd's opportunities should be prepared for the long-term commitment of their capital, with the understanding that liquidity events are not guaranteed within any specific timeframe. This long-term view is crucial for participating in the potential growth of early-stage companies while acknowledging the illiquid nature of these investments.
Who can invest in OurCrowd?
International
Investment opportunities on the OurCrowd platform are exclusively available to accredited investors, reflecting the high-risk nature of early-stage, privately-held company investments.
Accredited investor status is defined by specific criteria that vary from one country to another, based on local regulations. OurCrowd adheres to these regulations to determine eligibility for participation in its investment offerings.
While OurCrowd is accessible to residents of most countries, there are notable exclusions due to regulatory and legal restrictions. Individuals residing in Cuba, Iran, Lebanon, North Korea, Syria, and the Crimea Region of Ukraine are not eligible to invest through the OurCrowd platform. For those who meet the accreditation criteria outside of these excluded regions, OurCrowd offers a pathway to engage in startup and venture fund investments.
Is OurCrowd regulated or audited?
SEC Regulated
OurCrowd operates within the regulatory frameworks of the countries where it offers its investment opportunities, adhering to local laws and regulations governing accredited investors and investment platforms. This compliance ensures that OurCrowd follows the necessary guidelines to protect investors and maintain the integrity of its investment offerings.
The platform is subject to the regulatory oversight applicable to venture capital and investment platforms, which includes requirements for transparency, investor qualification, and financial reporting. OurCrowd's adherence to these regulations is crucial for providing a secure and reliable environment for its investors.
While specific details about audits are not provided, platforms like OurCrowd typically undergo regular financial audits and other compliance checks to ensure their operations align with legal and financial standards. These audits are part of the regulatory compliance process, aimed at safeguarding investor interests and promoting the platform's reliability and trustworthiness in the investment community.
Is OurCrowd insured?
No
As of the latest information available, OurCrowd does not explicitly mention providing insurance for investments made through its platform.
Typically, venture capital and startup investments, like those facilitated by OurCrowd, do not come with insurance that protects investors against losses. The nature of these investments is inherently risky, and potential investors are expected to assess and bear these risks themselves.
Does OurCrowd distribute payouts?
No Recurring Payouts
Investments made through OurCrowd in startups and venture funds typically do not distribute dividends. The primary goal of these investments is capital appreciation rather than income generation. Startups and early-stage companies usually reinvest any profits back into the business to fuel growth, rather than paying out dividends to investors. Similarly, venture funds focus on generating returns through the increased valuation of their portfolio companies, aiming for profits realized upon exit events like a sale or IPO.
Therefore, investors should not expect regular dividend income from their investments on OurCrowd. The potential financial returns are instead realized at the time of a liquidity event, which could be several years after the initial investment. This structure aligns with the long-term, growth-focused nature of venture capital investing.
How do I get my money back from OurCrowd?
Investors can expect to potentially get their money back from investments made through OurCrowd during a liquidity event, such as an initial public offering (IPO), acquisition, or sale of the company. These events allow investors to sell their shares or stakes in the companies or funds they have invested in.
The exact mechanism for return on investment will depend on the terms of the specific investment and the nature of the liquidity event. For example, in the case of an IPO, investors may have the opportunity to sell their shares on the public market, while in an acquisition, they might receive cash or shares of the acquiring company.
What are the annual fees for OurCrowd?
OurCrowd's fee structure is designed to align with traditional venture capital (VC) models and includes several components:
Management Fees. OurCrowd charges a management fee of 2% annually for the first four years. This fee is intended to cover the operational costs of managing the investments, including due diligence, portfolio management, and other investor services. The management fee is capped, which means it does not continue indefinitely but is limited to a specific duration to reduce the cost burden on investors.
Administration Fees. There is an upfront administration fee of 4%, which is directly allocated for the reimbursement of the Special Purpose Vehicle's (SPV) expenses. These expenses are drawn down as they are incurred. The SPV is a structure commonly used to manage each investment separately. In some cases, additional reimbursement beyond the initial 4% may be required and can be set off from the proceeds upon distribution of returns.
Carried Interest. Carried interest is a performance-based fee calculated as a percentage of the profits. OurCrowd charges 20% on profits up to 5 times (5x) the amount invested. For proceeds that exceed 5 times the invested amount, the carried interest rate increases to 25%. This tiered approach to carried interest incentivizes OurCrowd to maximize the returns for investors, as the platform's earnings increase with the success of the investments.
How do I handle my investments in OurCrowd?
On the OurCrowd platform, investors have the opportunity to manage their assets by selecting from a variety of investment options, including direct investments in startups, venture funds, and portfolio accounts. However, given the nature of these investments, active asset management options are somewhat limited compared to traditional liquid assets like stocks or bonds.
Investors can:
1. Diversify their portfolio by choosing investments across different sectors, stages of development, and geographic locations to spread risk.
2. Monitor performance through updates and reports provided by OurCrowd, allowing them to stay informed about the progress and performance of their investments.
3. Participate in follow-on investment rounds to increase their stake in performing companies, subject to availability and investment minimums.
4. Decide on exit opportunities, where they may have the option to sell their stake during a liquidity event such as an IPO or acquisition, subject to the terms of the investment.
Beyond these actions, the control over day-to-day decisions or strategic direction of the companies or funds invested in is typically not in the hands of individual investors, as these are managed by the companies' management teams or fund managers.
How does OurCrowd get taxed?
OurCrowd provides its investors with an annual statements, which serves as a crucial document for tax reporting purposes. This statement summarises the investor's financial activities and positions within the platform over the fiscal year, including any profits, losses, or distributions.
How many investors are on OurCrowd?
The website received an average of 103,000 visits in the last 3 months.
OurCrowd boasts a growing community of 230,000 registered investors. This extensive network of investors has committed funds totaling $2.3 billion.
OurCrowd's portfolio is substantial and diverse, consisting of 440 direct portfolio companies. This variety offers investors a wide range of sectors and stages to choose from, underlining the platform's commitment to providing access to high-quality investment opportunities.
The platform's track record includes 63 exits, indicating successful outcomes for certain investments, which can be an attractive point for potential investors looking for platforms with a history of delivering returns.
Additionally, OurCrowd manages 56 funds, further diversifying its investment offerings and enabling investors to spread their risks across different assets and sectors.
Significantly, their selection process has led it to vet 18,700 companies. This selective approach is crucial for investors seeking to minimize risks and invest in startups with high growth potential.
Who is the CEO of OurCrowd?
Jonathan Medved is the founder and CEO of OurCrowd.
He is a well-recognized figure in the world of venture capital, particularly within Israel's dynamic high-tech ecosystem. Before establishing OurCrowd in 2013, Medved had an extensive career as a venture and angel investor. Over two decades, he invested in nearly 200 startup companies, demonstrating a keen eye for potential and an adeptness at nurturing startups to success.
Steven Blumgart, co-founder and Chairman of OurCrowd, is a leading investor and philanthropist. Steven was part of the senior management team at Glencore International where he headed its aluminum business.
