Startup Investing

Angel Investing: A Three-Part Guide to Earning Your Wings | Risky Business (2/3)

Angel investors dream of finding and investing early in the next Uber, Airbnb, Waze, or Mobileye. While it’s easy to get seduced by the hype, serial startup investors know it is hard to be successful in this asset class. With the help of members of OurCrowd’s experienced investment team and other industry resources, we have put together a quick, three-part guide to ‘earning your wings’. These articles highlight essential terms and strategies while referencing accepted industry best practices; with these basics in hand, getting started in startup investing can be a lot smoother. Part 1: The Basics | Part 2: Risky Business | Part 3: Strategy Part 2: Risky Business Understand the Risk The distribution of returns within a VC portfolio typically follows the power law curve. According to Horsley Bridge, if you take a longtime limited partner in VC funds who has been collecting data on VC returns since 1983, you’ll find that just 6% of their hundreds of investments have generated 60% of their total returns since 1985. Professor William Sahlman of Harvard Business School is quoted saying, “80%...

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Angel Investing: A Three-Part Guide to Earning Your Wings | The Basics (1/3)

Angel investors dream of finding and investing early in the next Uber, Airbnb, Waze, or Mobileye. While it’s easy to get seduced by the hype, serial startup investors know it is hard to be successful in this asset class. With the help of members of OurCrowd’s experienced investment team and other industry resources, we have put together a quick, three-part guide to ‘earning your wings’. These articles highlight essential terms and strategies while referencing accepted industry best practices; with these basics in hand, getting started in startup investing can be a lot smoother. Part 1: The Basics | Part 2: Risky Business | Part 3: Strategy Part I: The Basics Do Your Homework, Be Highly Selective A 2007 study on angel investors’ returns found that those who spent more than the median time of 20 hours performing due diligence had an overall portfolio return of 5.9X, while those that spent less than the median only had returns of 1.1X (source). OurCrowd’s investment team (made up of around 20 investment analysts, principals, advisors, and partners) vets more than 200 startups a month....

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Become a Self-Aware Investor

Become a Self-Aware Investor “Time is the friend of the wonderful company, the enemy of the mediocre.” This famous quote by Warren Buffet – who is currently valued as having a total net worth of $78.7 billion – reflects the well-known tendencies of this wildly successful investor to make incredible stock picks, and then to hold his stocks for a long time. But how does one identify what Buffet terms a “wonderful company”? What drives an individual’s investment decisions? With so many companies and markets to choose from – and endless “expert” advisors offering advice – how does one cut through and identify the right investment route? Blueprint for Success As with other situations where there are just too many choices, and you need to weed through the options and figure out find what you’re really looking for – for example, as a student choosing a university or deciding on a career – it’s partly a question of self-definition: understanding what you want, what you believe in, and what your strengths are. The key to effective decision-making in these...

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From Ballistics to Blackouts: How One Company Uses Israel’s Military Technology to Help Power Utilities, Keep Lights On

Guest post by Phillip Fine, Jerusalem-based writer/editor.  There’s commercialization of military know-how and then there’s Israel’s commercialization of military know-how. Take mPrest Systems Inc., a software maker headquartered in Petah Tikva, a city of 231,000 roughly 11 kilometres east of Tel Aviv. That company is selling the software that Israel used in Iron Dome – its system for shooting down Hamas rockets — to electric power utilities to help them prevent blackouts. Specifically, by polling sensors, the software allows an electric utility to monitor its equipment. The utility can then better predict when a transformer might pop, thus allowing for repairs before the electricity goes off. One customer, the New York Power Authority, has already used the software to pinpoint transformers that it didn’t even know were problematic, says Natan Barak, mPrest’s CEO, who spoke to Media Line at the OurCrowd global investor summit in Jerusalem Feb. 16. mPrest hopes to sell the software to other electric utilities in the U.S., as well as to power companies in Asia. In fact, the company is customizing its product so utilities...

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A Background on Rights Offerings

Rights Offerings A Rights Offering is an issuance of ‘Rights’ to a company’s existing shareholders that allows them to purchase additional shares from the company in proportion to their ownership, within a fixed time period. In a Rights Offering, the issue price of each share is generally at a discount to the current market price. The Good Companies will often seek a Rights Offering when they need to raise money quickly (for example, to service a debt covenant, pursue an aggressive acquisition or for general working capital requirements). From a company’s perspective, Rights Offerings are typically much quicker to close than a new equity issuance, and are much cheaper to execute. From an investor’s perspective, the subscription price of a Rights Offering is often-times at a significant discount to the company’s stock price, as it needs to be attractive enough to encourage all investors – including early investors –  to participate with their prorata amount of the raise. The Bad Issuing stock at discounted valuations carries the risk of signaling a distressed cry to the market. Not only is the offering’s share price discounted, but by...

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