Japan’s SoftBank Takes $25M Stake In OurCrowd, Israel’s Most Active VC

Israeli crowdfunding platform OurCrowd announced Wednesday that Japanese tech giant SoftBank has invested $25 million through its Vision Fund 2, in exchange for an undisclosed stake in the company.

OurCrowd, which global financial data and software company PitchBook recently named as Israel’s top VC investor (for the ninth year in a row) revealed that the proceeds from the round would go toward the expansion of the company’s platform building its investor base and accelerating the identification of high-potential, tech-enabled private companies.

In a briefing, OurCrowd CEO Jon Medved said that he was thrilled to be partnering with SoftBank and that the two firms would be “exploring joint investment opportunities, helping each other source deals. This is a dream for us and we’re very excited.”

Another aspect of the deal is that SoftBank and OurCrowd entered into a strategic cooperation agreement to source investment opportunities through SoftBank Investment Advisers (SBIA – Sub-Adviser to SoftBank Vision Fund 2), a wholly-owned subsidiary of the company and they will be evaluating and understanding better the market trends in the frontier aspects of technology; such as quantum computing, artificial intelligence, mobility, agtech, cybersecurity, health tech and more while aiding one another with regard to geographical expansion. “That specialized, strategic cooperation will significantly help us with deal sourcing,” Medved explains in an interview with NoCamels.

Over the last several years, SoftBank has invested billions in Israeli companies. Earlier in the year, its Vision Fund 2 was instrumental in Israeli retail data firm Trax, raising $640 million in a Series E funding round. SoftBank’s ties to Israel were further strengthened in July, when the Japanese firm hired former Mossad chief Yossi Cohen to lead its Israel office. In addition, it has also invested in facial recognition startup AnyVision, US-Israeli cybersecurity firm CyberReason, and social trading platform company eToro.

NoCamels asked Medved if Cohen’s presence at SoftBank was instrumental in the deal’s finalization. “We are big fans of Yossi – as we are with the whole SoftBank team – and excited by the potential to work with him, however, we already have several co-investments with them, and this partnership was in the works long before his arrival.”

He adds that much of the company’s excitement was due to the fact that although there is a significant difference in scale between OurCrowd – albeit that it’s the “biggest global online venture platform” – partnering with the world’s largest investor with well in excess of $100 billion in investments, “very fruitful and happy relationships can emerge when companies each bring value to the other.”

Democratizing VC investing

Medved also views the deal in the light of how SoftBank’s approach will help to advance the “democratization of access” to venture capital. “Traditional VCs usually only have elite, select, institutional investors. However, what SoftBank – the biggest venture player in the world – is investing in, is the democratization of investment, which is very much in line with our vision when the company was founded in 2013.”

While SoftBank’s stake in OurCrowd could have been seen as a departure from investing in companies and seeming to shift to a VC, Medved explains that the Israeli firm is not a typical fund.

“Despite many people thinking that we are a VC fund, OurCrowd is actually a fast-growing tech business We have over 60 full-time technology employees (among our 300 workers) developing software and machine learning. This tech team builds the OurCrowd online venture investing platform, not simply a VC fund. On our platform, we have 300 companies for accredited individual investors and institutions to invest and choose, as well as 30 different VC funds. SoftBank is investing in the parent entity of OurCrowd, which is building the platform, and acts as the general partner of all underlying investment vehicles and funds.”

“OurCrowd is growing as are many other tech businesses at a rapid rate, having grown our annual additional assets under management (AUM) by 100 percent this year to exceed $500 million, and our accredited investors by 300 percent. Last year we added 25,000 registered subscribers, and by the end of September 2021, that had risen to 75,000. We are on course to surpass 100,000 by the end of this calendar year.”

2021 – A bumper funding year

According to Pitchbook, OurCrowd is about three times more active than its closest competitor – and this is in a year, where, in the first three quarters, Israeli tech firms have raised a monumental $17.8 billion. And October has kept delivering. With 11 mega-rounds of investment – including Immunai that raised a whopping $215 million in a Series B round with a valuation of more than $1 billion, the country has more than doubled the amount raised for the whole of 2020. “Israel is doing incredibly well with this tech economy,” Medved remarked in the press briefing.

The OurCrowd CEO added that “part of what means so much to us is that we are seeing companies in late-stage, with big check writing. Given the fast-maturing transition of the startup nation to the scale-up nation, where the headlines go to those companies that are valued at approaching $10 billion. Everyone is now wondering whether an Israeli company will one day be worth $50 or $100 billion.”

To date, OurCrowd’s startups have recorded 50 exits including several stock market listings: plant-based protein company Beyond Meat, Israeli insurance tech firm Lemonade, LiDar sensor tech startup Innoviz, and cybersecurity company, Hub Security.

Medved explained that while OurCrowd is headquartered in Israel “and very proud to be,” half of the company’s current deal flow is outside of the Jewish state. “We’re hunting deals and executing on companies around the world. And to team up with the leader in the venture market as an investor – and as a strategic partner – will have a very profound impact on OurCrowd and its portfolio of companies.”

“Softbank has been investing ahead of major technology trends for over 40 years and we believe there is huge, embedded potential in the private markets ecosystem,” said Cohen. “In OurCrowd, we have an investment partner with the networks and pedigree to help promising Israeli startups to potentially emerge as international tech champions.”

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