Israel’s blossoming start-up economy driving major growth
Audrey Jacobs brings a unique perspective to her role as VP of OurCrowd Americas. With two decades of marketing experience building brands in the high tech, biotech and medical sectors, Ms. Jacobs brings a different voice as one of the few OurCrowd team members that did not come from a venture capital background.
Ms. Jacobs is a featured speaker at the 2015 Fintech Global Expo, taking place on May 28 and 29 at the San Diego Convention Center. She will speak on the importance of people in online investing by discussing the roles co-investors, mentors and the crowd play in the process.
Ms. Jacobs brings both a marketer’s zeal and the passion one can only have for something they hold dear to her role as Vice President of OurCrowd Americas. The marketing half has been honed through two decades in global branding and media relations. The passion comes from a similar period of time spent fundraising for Jewish and Israeli causes.
Both are clearly evident in the initial moments of our recent call when I ask her to describe Israel’s startup culture.
“The world may not know Tel Aviv is number two to Silicon Valley in terms of vibrant startup economies in the world,” Ms. Jacobs said. “In 2014 there was $15 billion in exits, 18 IPOs and 82 mergers and acquisitions.”
The numbers Ms. Jacobs shares are staggering. Global capital has flowed into Israel to the tune of $3.4 billion to 688 startups in recent years.
She explained Israel has a startup culture. With a population of eight million making them slightly smaller than New Jersey, Israel has a small but intense networking community. More than 400 global corporations conduct research and development in the country, including Facebook, Intel, and Google. Many also purchase local firms.
“There is a low fear of failure,” Ms. Jacobs said. “Risk tolerance is very high.”
That adventurous spirit is nurtured by the experience every adult gets during their military service, a position in which they make difficult decisions in teams and one where challenging commanders is encouraged. When they leave the service most go to college.
When they graduate, many start businesses, sometimes more than one. Ms. Jacobs said the average exit takes between four and eight years and there are more than 5,000 serial entrepreneurs in the country.
“There is the concern Israel is about startups and less about scaling up,” Ms. Jacobs said.
A big reason is geography, she explained. With 22 ” not so friendly” neighbors, Israel’s entrepreneurs have fostered a global go-to-market strategy out of necessity.
That global approach leaves the Israeli business community less vulnerable to regional volatility, Ms. Jacobs explained.
“During the middle of the last war, Israel saw the biggest IPO in its history,” she said, in reference to Mobileye’s $890 million raise. “From the moment Israel was created there has always been a threat. That created a determination and focus to grow and succeed.”
Much of the technology created by Israeli startups is having a global impact, Ms. Jacobs said, citing examples from agriculture and medicine. Their national defense, cyber security, and terrorist tracking capability are among the global elite in part because of the contributions of startups.
Many in the alt-fi industry believe that a common strength displayed by those companies who survive the eventual attrition will be the strength of their vetting process. If investors are confident the opportunities on a given platform are sound investments, and if history proves them right, those platforms have a good chance of sticking around.
Ms. Jacobs said OurCrowd gets pitched 2,000 opportunities each year and accepts at most two percent of them. A separate investment fund is created for each deal, and OurCrowd is the first investor in each one.
OurCrowd has cultivated a roster of established mentors who are actively involved with mentoring companies in sectors where they have deep knowledge, Ms. Jacobs said. OurCrowd is the only platform with a Chief Exit Officer, whose role includes helping each company grow and make connections in OurCrowd’s global network.
On the investor side that network includes 8,000 people in more than 110 countries, Ms. Jacobs said. That led to a unique problem where OurCrowd offerings were completely subscribed before parts of the world had their morning coffee.
To level the playing field, OurCrowd created a portfolio reserve where investors get a guaranteed allocation in every deal unless they opt out. Participants wire a minimum of$100,000 in advance and have a week to study each opportunity during which time they can say no.
OurCrowd companies must a portion of their stock to charitable causes, Ms. Jacobs said. When the company goes through a liquidity event, the shares get sold with the proceeds devoted to charitable activities.
“With so much wealth being created, it is part of our core,” Ms. Jacobs said. “Many companies are creating technology that improves society, but we have to be leaders that demonstrate we are giving back out of our own pockets.”
Audrey Jacobs is excited about the current state of alternative finance. Seeing a parallel with the advent of online trading, Ms. Jacobs said the socialization of finance, through crowdfunding and peer-to-peer lending as a positive for investors, who want increased control over and access to their investments.
“There is an emerging industry happening again right now and it’s thrilling. Investors want more control and access in their investments. The JOBS Act provides them with that.”
“We are seeing better returns from the crowd today than we are from traditional brokerage houses.”
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