EKMH Innovators Interview Series
An interview series spotlighting global tech influencers, disruptors, visionaries, and of course, innovators.
Seeking the secret recipe to OurCrowd’s “Israeli Special Sauce”
OurCrowd, a global investment platform which brings VC opportunities to accredited investors worldwide, is the leader in equity crowdfunding. Managed by a team of seasoned investment professionals and led by serial entrepreneur and CEO Jon Medved, OurCrowd vets and selects companies, invests its own capital, and invites its accredited membership of investors and institutional partners to invest alongside in these opportunities. OurCrowd also provides support to its portfolio companies, assigns industry experts as mentors, and creates growth opportunities through its network of strategic multinational partnerships.
The OurCrowd community consists of 37,000+ registered investors from more than 180 countries. Rated “The Most Active Venture Investor in Israel” by Pitchbook, OurCrowd has $1.28B in commitments and has made investments in 170 companies and funds. OurCrowd already has had 35 exits to date, including Beyond Meat’s IPO (NASDAQ:BYND); JUMP Bikes sold to Uber, Briefcam’ sale to Canon, Argus’ sale to Continental, Crosswise’s sale to Oracle, and Replay sale to Intel.
OurCrowd Global Investor Summit, scheduled to begin on February 13, 2020, continues to be the must-attend event of the global startup ecosystem. With over 18,000 people registering last year, the Summit became the fastest-growing tech conference in the world; attendance numbers are expected to exceed last year’s numbers, which were already record-breaking. According to the platform, registration has almost exactly doubled the amount it was this time last year (3,386 versus 1,723). Another compelling stat: thirteen startups that appeared onstage at the past four Summits had a notable acquisition or IPO within a year. On the main stage alone, six startups had major exits within three months of the Summit.
OurCrowd has also recently initiated the Sync global program. Not only did Sao Paulo 2019 celebrate its first successful event, Medved also announced that OurCrowd would open its 13th global office in São Paulo. OurCrowd Sync events are being planned across the globe, with plans to host Sync programs in the U.S. and India in the upcoming year.
I’ve had the pleasure of interviewing Jon Medved several times, and as always, his responses are revelatory. In this interview Medved shares his candid insight about a variety of topics, including FoodTech, delicious, love-at-first-bite Kosher Beyond Meat cheeseburgers, successful exits, OurCrowd’s new incubator Labs/02, impact investments, investment advice, platform growth, book recommendations, travel advice and more… Our interview follows.
EKMH: Why are you bullish on food companies?
Jon Medved: The food industry is giant – $12 trillion and growing. I don’t think people understand how much transformation there’s going to be in food. Companies like Beyond Meat are making tremendous ground. Their IPO was one of the most successful debuts in decades. And with deals with KFC,, Subway and Dunkin’ Donuts, people are believing it will be not only a growth story, but a profit story. The real question for investors is how do they get in before such a company goes public. Because today companies are waiting too long to take advantage of the public markets. Platforms like OurCrowd provide an answer to those investors, which is that they can invest before the companies go public.
EKMH: Did you experience love at first bite with Beyond Meat?
Jon Medved: It really was love at first bite with Beyond Meat! I was on vacation with my family in Jackson Hole, Wyoming, and we went wild eating Beyond Meat burgers, in particular with cheese (which we normally can’t eat with meat burgers since we keep Kosher!). This great personal experience with my family just sealed my interest in the deal. Obviously, OurCrowd’s investment team had already gone through our normal thorough due diligence, and we were very interested in the company. But when the product itself can pass a taste test with real people, that’s powerful.
EKMH: What predictions do you have for food tech and how will these changes affect the global supply chain? What about environmental impacts?
Jon Medved: I think FoodTech is going to become one of the most active areas of innovation. It has to be, because the world’s food supply, and everyone’s health, depends on it. A recent United Nations report warns that the impact of historic heat waves, fires, and floods threaten farms and food production. Finding solutions is absolutely critical. That’s why OurCrowd’s newest incubator Labs/02 focuses on FoodTech. It’s going to put over a hundred million dollars to work developing solutions throughout the food and beverage supply chain. Our partners include Israel’s largest food company Tnuva (now an affiliate of China’s giant Bright Food), Israel’s largest drink company Tempo, and Finistere, a leading ag and food tech venture fund based in California. Global food companies like PepsiCo, Bright Food, and Heineken are also going to be actively involved in the incubator, along with leading research and academic institutions in Israel. We are already investing in an incredible array of technologies in this and related areas from precision agriculture, like our startup Taranis which uses Big Data to predict disease and protect against pests, to the actual composition of the food, like Beyond Meat, and then to supply chain and analytics.
EKMH: Since founding OurCrowd in 2013, you now have a community of 30,000+ – its 37K+ investors originating from over 183 countries, 11 OurCrowd branches on four continents and funded companies in Israel, the USA, India, Canada, UK, Hong Kong, Singapore and Australia. What’s next for OurCrowd?
Jon Medved: Well, first of all, we’re never satisfied. We’re proud to have made all the accomplishments you mention, and that we’ve managed in the last six years to amass over $1 billion in commitments from investors all over the world. We’ve essentially proven our model and showed that the rest of us can get into deals with the same terms and at the same price and same kind of share structure as the biggest investors in the world. The marketplace has embraced the model, and we have 37,000 investors signed up to our platform. I want to see that grow to over a 1 million investors, and then get to 10M investors. Just last month on Sept 19th the Chairman of the SEC, Jay Clayton said, “It’s hard to give individuals access to private markets. Can we have a fund structure to ensure that ordinary investors are getting the same deal?”
Well, OurCrowd provides that access to private deals that he is speaking about. I don’t think that it’s crazy to believe that someday we will have millions of investors on our platform, and once we have proved ourselves with individual investors, institutions will come knocking at our door. Just because our minimum is $10,000 doesn’t mean you can’t put in $10 million. So major family offices and institutional investors are going to be joining in a big way too.
What we’ve also shown is that we can build these startups into powerhouses by mobilizing the power of the crowd. We have a global network of investors, corporate partners, governmental agencies, and other VCs we draw on for capital, recruitment, business development, whatever a company needs to grow. With traditional VCs, you’re dependent on the connections of three or four partners. But that can’t compete with an educated, connected crowd of over 30,000 – or a million! Our focus is not just finding good deals, but building the companies with the crowd. We’re already the most active investor in Israel. I don’t see why we can’t be among the most active in the world.
EKMH: In which areas (i.e. diversity, corporate governance, due diligence, community outreach, etc.) do you want OurCrowd to be known as a global leader, in addition to its being a successful global investment platform?
Jon Medved: First of all, I’m most excited about the impact that startup technologies can have on the world, and we actively promote that. We believe strongly in a double bottom line where you can make money and do good at the same time, without sacrificing either goal. A large portion of our portfolio can be described as “impact” investments, companies which help to solve such global problems. Many of our investors are looking to support an UPnRIDE, (which is helping to get disabled people standing upright), to back Climacell’s weather forecasting technology to provide cutting-edge weather data to Africa, or to fund Sense Education, whose AI enabled testing solution allows countless students to learn more efficiently and get ahead. Two of our companies, Airobotics and MeMed Diagnostics, were just featured in the World Economic Forum’s 2019 Technology Pioneers list! Last year, we conducted the first ever report focused on impact investing in Israel and we’re excited to see that 83% of companies reported that their product or service can reach underserved populations. And we launched our own OurCrowd Impact Fund to invest in mission-driven companies aligned to the UN’s Sustainable Development Goals. As our partner in this effort, Sir Ronald Cohen, who is known as the Father of Impact Investing, said at our 2018 Global Investor summit, “You can do well even as you’re doing good.”
Now, related to this is the importance of connecting the entire innovation ecosystem. We connect everyone – investors, multinational corporations, entrepreneurs, VCs via our online platform. We provide these connections through web, mobile and webinar online access as well as hundreds of face to face offline events. In fact, we put on this huge conference every year, called the OurCrowd Global Investor Summit, one of the largest tech conferences in the world and the biggest business event in the history of Israel. It will be held on February 13, 2020, in Jerusalem. Last year, over 18,000 people registered to attend from all over the world! The whole idea is to get all those players in one place, and let amazing things happen. Bringing the power of the crowd to bear on these startups leads to a sort of virtuous circle of activity, and allows people to contribute their skills, money and connections to help these remarkable technologies to address the biggest challenges we face.
By the way, we’re extending this Summit phenomenon to other regions, beginning with Latin America this week. Our first major regional event, called OurCrowd Sync, is in Sao Paulo, on September 25. It’s a sort of mini-Summit, with keynotes and breakouts and tech demos and hopefully almost a thousand people attending. We’re very excited about it. We’ve got plans to repeat it in key regions around the world. When you bring great people together, great things happen.
EKMH: OurCrowd is sector, stage, and geography agnostic. As early investor in a variety of businesses including Cognito, Magisto, Briefcam, Jump Bikes, Argus, FreeD, ReWalk and 200+ other startups, what advice do you have for investors regarding due diligence and valuation? How have OurCrowd’s own due diligence processes evolved?
Jon Medved: The biggest piece of advice I have for venture investors is don’t go it alone. Startup investing is at the end of the risk/return spectrum – the potential for big returns and big risk. Private companies have no requirement to report information, so you need someone to watch your investment, represent your interests, as well as guide and add value to the company. Someone has to manage the process. Someone has to do the due diligence, select the right companies, provide board seat guidance, and add value to the company. That’s what we do at OurCrowd. We invest our own money in every company on our platform and invite our network to invest alongside us. We perform due extensive diligence with a company’s customers, competitors, partners, and teams to determine if the investment is right for us. After the investment, we sit on company boards, provide governance and guidance, and leverage our global network to provide unequalled value.
EKMH: In which other industries do you see the possibility for disruption and investment?
Jon Medved: As I said, I’m bullish on food, but I’m also bullish on the transformation of other traditional industries. Insurance, transportation, education, property, all of these often “sleepy old economy industries” have a lot of life left in them, especially when innovation is applied to them in new ways. The automotive industry has always been innovative, but no one ever thought we’d remove the driver! Now autonomous driving is the next big thing. We have many companies in this area, but two of them, Cartica AI, an automotive visual intelligence platform, and Hailo developing an AI chip for edge devices, we think are going to be huge.
HealthTech is always a top area for disruption. But how about curing cancer? One of our portfolio companies, AlphaTAU, is treating solid tumors with radioactive seeds that release short-lived alpha-waves that destroy solid tumors. Or Parkinson’s disease? Insightec is MR-guided focused ultrasound technology to precisely treat specific areas in the brain to reduce essential tremors, tremor-dominant Parkinson’s disease, and neuropathic pain. And last year, it completed its first human trial in Alzheimer’s disease.
EKMH: Tell us more about your and your team’s deal flow review and innovation scouting. What advice do you have for potential investors?
Jon Medved: We see hundreds of companies every month, and we invest at a monthly pace of 2-3 companies, or about 2% of the opportunities we see. We feel very strongly that the best way to help our investments fulfil their promise is to perform rigorous due diligence and provide active management help, which is a standard part of the venture capital investing model – though few crowdfunding platforms take that kind of active role. We source and vet every deal, deciding upon which to invest and negotiating the term sheet, and most importantly, by investing our own money in each and every deal.
Because we see almost every deal there is in the Israeli ecosystem, and because of our reach through our incubators and local partners, we are the ideal partner for multinational corporations seeking innovation opportunities. Early identification of promising startups allows a multinational corporation to help guide the company towards the innovation about to change its industry. Every multinational is seeking help in providing a direction for technology scouting that will meet the corporation’s future needs. Moreover, each wants an inside track for Proof of Concept testing as well as getting an early pole position for potential acquisitions. We have many global companies that partner with us for scouting and hundreds more that come to our annual Summit to get a view of what’s going on. We’ve facilitated dozens of successful partnerships, resulting in tens of millions of dollars of business transactions for our portfolio companies.
In terms of advice for investors, they should look closely at both the specific investment opportunity and also the platform through which the investment is being made. An investor must look at everything in the context of his or her portfolio and life goals. Investors should be thinking about how much to invest. An allocation of 5% of one’s overall portfolio to startups can potentially increase returns and as long as it is invested in a portfolio approach without trying to cherry pick just one or two opportunities. Allocating 50% of one’s personal portfolio to startups is neither wise nor prudent, given the inherent risk in the asset class. One should try for a minimum number of startup investments in his or her portfolio to be 10. A good rule of thumb is that one should invest in ideas he or she somewhat understands or can seek advice from friends and contacts who know these areas.
Invest in a trusted platform that way - intelligently- then you have a reasonable chance to build a good portfolio for yourself. Even if several companies fail to bring great returns, the winners in the portfolio should cover the losses and deliver the profits. That’s why we offer funds and other investment structures that put together great companies in one vehicle, providing much needed diversification.
EKMH: As you mentioned, OurCrowd has also taken special interest in AI, with investment in self-driving cars startups Hailo and Cortica. Tell us about your own experiences behind the wheel and how these have shaped your investment ideas/theses.
Jon Medved: Since I grew up in LA, I have always loved driving, but I am willing to give up the wheel to AI if it improves safety and lets me get home after a long day without the fear of nodding off at the wheel. Being able to concentrate on work or a phone call with my grandchildren would be a tremendous bonus while in the car. Hailo and Cortica are just two of the most exciting companies in autonomous driving. Hailo’s AI chip architecture is really a breakthrough and will change the way we run machine learning algorithms at the edge. Cortica provides unparalleled software abilities to detect objects making cars as smart as the human cortex. But we have also invested in dozens of other startups that are also exciting. We like Phantom Auto, whose teleoperation for autonomous vehicles can address unexpected situations and rescue vehicles in the field. Or Viziblezone, which is building a system to protect pedestrians from all kinds of threats. Or Foretellix, who are going to make us all safer by its gigascale verification system for autonomous driving.
EKMH: As a global entrepreneur, one is required to be culturally savvy. Please share an anecdote or two about what you’ve learned through the years in your international experiences.
Jon Medved: Once I was with a group of Israelis who were at a critical negotiation moment with a room full of Japanese businessmen and women in Tokyo. When the Israelis left the room to discuss the offer on the table, they went to an adjacent room to discuss and left me behind with the Japanese group. We then heard an unnatural and rather scary amount of yelling, table pounding, and overall extreme behavior that frankly freaked out the Japanese. When the Israelis came back into the room. I explained to the perplexed Japanese group that this was simply normal business behavior in our country, which they accepted, and we got the deal done.
Despite these important cultural differences for almost any national group – in behavior, in background, in interests— we all share today a common interest in innovation. I feel there is a strong shared global interest in the phenomenon that is Israeli innovation, where people all over the world are seeking the “Israeli special sauce” that allows this small country to punch way beyond its weight in coming up with unexpected solutions to global problems, and often very quickly. Much of what brings thousands of people all the way to Israel for our Summit, is because we’re all speaking the same language no matter where we come from: what is hot today in innovation, how to find it, foster it, leverage it, and invest in it.
EKMH: In our past interviews you’ve also shared *terrific* reading recommendations. Which books have you recently read that you’d recommend?
Jon Medved: I enjoyed Ben Mezrich’s Bitcoin Billionaires, it was fun and full of great scenes from the trenches of the blockchain. I really get a kick out of Daniel Silva’s spy novels featuring Gabriel Alon, the Israeli superspy who everyone hopes actually exists, and I am quite big on reading the weekly section of the Torah (bible portion) with my growing tribe of grandchildren so we can discuss and learn from the ancient but still relevant wisdom of the Book of Books.
EKMH: Vacation is always around the corner -- which locations are on our your “Must Visit” list and which books will you bring with you and which podcasts will you download?
Jon Medved: I am thinking of the Andaman Islands, as well as Bhutan for next specific travel vacation destinations, but I mostly combine hanging out for a few hours in and between my constant travel schedule around the world, which happens to take me to amazing places in Brazil, Columbia, Singapore, Japan, Mexico, Australia and the US, where I always find some time for beauty in between meeting with companies and investors. I pick my vacation reads up at airports and cool bookstores looking to be surprised. I have not gotten into podcasts on vacations since I spend too much time anyway connected to devices and electronics and on vacation I really want to disconnect and breathe as much as possible.
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