The Big Value Creation Trend of 2015: Q&A with Jonathan Medved
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all kinds of innovation everywhere. Some of the most exciting companies are the ones that are building in multiple locations, whether it is in India, China, Israel, Russia, or Southeast Asia. There’s just all kinds of innovation out there.
I live in Israel, which is hyperlocal too. Here the joke is that we live in one big swimming pool, and if anybody takes a leak, you see it. That’s a good thing, because it’s easy to do due diligence.
Far be it for me to talk about not having strong communities, but on the other hand, if you just get your investors from around the corner, you’re sort of losing the opportunity to get help outside of the country. We have this network of people from 110 countries. They’re from all over the world and we bring them to the local company here by virtue of the Web.
It’s kind of a corny thing, you know, ‘Think globally. Act locally.’ But it’s that interplay of knowing people in the ecosystem, but [also] really being part of a global network.
X: What percentage of your portfolio are Israeli companies?
JM: About 70 percent right now. About a third of our companies are outside Israel.
X: And most of the rest are in the United States? Are they concentrated in any particular place?
JM: They’re all over the place. Most are in the Valley. The cool thing is that we co-invest with known U.S. venture capital funds. Andreessen Horowitz, Sequoia, Eric Schmidt, Marc Benioff, Mark Cuban, and you name it. We’re trying to invest in Grade A companies, alongside known venture and angel syndicates.
X: What percentage of your investors are outside of Israel?
JM: About 80 percent. So it’s an inversion.
X: I’m not sure how to put this question, but I’m curious —
JM: — What percentage of our investors are not Jewish? I think that’s a completely legit question. I’ve never asked that question. We don’t have that on our registration form (laughs), tell me your synagogue affiliation. But my guess would be that half are not.
X: If the appreciation of value is all pre-IPO, with very little appreciation post-IPO, why would a small individual investor buy stock in a public tech company?
JM: Good question. The real question would be, if you took all 150 unicorn tech companies, and count up how many individual angel investors there are in these unicorns—my guess would be that we’re talking no more than a thousand people.
X: In each one.
JM: No! I’m saying total. How many outside investors do you think there are per company? Do you think there are more than 10 or 20 angels per company? My guess would be on average, 10 or 20.
Altogether, the total might be 2,000, but that’s it! And they get all the value! Talk about the 1 percent! This isn’t right. I mean, this is right for them. But opening this up to make it more democratic is really important, and it’s going to happen.
X: How much is the average OurCrowd investor investing?
JM: It’s approaching $150,000. The guys who are active on our site, who are writing checks, are investing about 150 grand, and they’re doing that over about five deals. So roughly $30,000 per deal five times. The minimum is $10,000. We have an instrument called the portfolio reserve, where you can actually buy 10 deals for $50,000.
Investing in private companies is fun and profitable if it’s done right. There is an inexorable movement. When we check back with each other a decade from now, there won’t be a couple thousand angel investors only in the 150 unicorns. There will be a lot more than that.