What's Up with Tech?
Tech Transformation with Evan Kirstel: A podcast exploring the latest trends and innovations in the tech industry, and how businesses can leverage them for growth, diving into the world of B2B, discussing strategies, trends, and sharing insights from industry leaders!
With over three decades in telecom and IT, I've mastered the art of transforming social media into a dynamic platform for audience engagement, community building, and establishing thought leadership. My approach isn't about personal brand promotion but about delivering educational and informative content to cultivate a sustainable, long-term business presence. I am the leading content creator in areas like Enterprise AI, UCaaS, CPaaS, CCaaS, Telecom/5G and more!
What's Up with Tech?
Democratizing Venture Capital: OurCrowd on AI, Cybersecurity, and Investment Opportunities in Global Startups
Interested in being a guest? Email us at admin@evankirstel.com
Unlock the secrets of global startup success with Jonathan Medved from OurCrowd as we explore the transformative mission behind democratizing venture capital. How has OurCrowd opened the gates of startup investment opportunities, traditionally reserved for the elite, to a broader range of accredited investors? With $2.5 billion in assets under management and investments in over 500 companies, Jon shares insights into their strategic focus on AI, medical deals, cybersecurity, and more, highlighting the rigorous selection process and the essential role of diversification in navigating the risks of venture capital.
Ever wondered how emerging technologies are changing the world? In our exciting discussion on investment opportunities, we emphasize the critical mutual diligence between investors and founders. Discover the thrill of backing innovations that tackle global challenges like carbon sequestration and food waste reduction. Jon shares inspiring success stories from investments such as Beyond Meat, Rewalk, Lemonade, and InnoValve, illustrating not only significant financial returns but also profound societal impacts. We also touch on future-forward sectors like quantum computing and cybersecurity, spotlighting companies like BioCatch and their pioneering use of behavioral biometrics.
Passion and risk are at the heart of venture capital. This episode offers a deep dive into managing these aspects, from the contagious enthusiasm of entrepreneurs to the importance of maintaining a diversified portfolio. Reflecting on past market cycles, Jon discusses lessons learned from periods of market excess and the importance of strategic exits. Additionally, we discuss OurCrowd’s innovative mission and why staying informed about industry trends is crucial. Tune in to grasp the full spectrum of venture capital, from exhilarating opportunities to essential strategies for sustained success.
More at https://linktr.ee/EvanKirstel
Hey everybody, Fascinating discussion today, diving into the global startup ecosystem with John from OurCrowd. John, how are you?
Speaker 2:I am doing great, Evan. Thanks for having me today.
Speaker 1:Well, thanks for being here so intrigued by you, your biography and your mission at Our Crowd. Let's start with that what is the big idea behind Our Crowd and how would you describe what you do?
Speaker 2:today. You know worldwide, for I would say, probably three quarters of a century. You know whether it's companies like Apple Computer or Google or, you know, most recently, nvidia.
Speaker 2:It's an amazing thing which not only allows people to create world-changing companies, but to make a lot of money as both a founder and an investor. The problem that we went to solve was that, until we came around and a few people like us, the investors in this asset class were almost all huge institutions or very big and wealthy billionaire families. Your average rich person was being discriminated against, Even if you had $5 or $10 million, which you'd hard saved as a successful dentist or a real estate developer of some strip malls or whatever you did. You decided that you wanted to invest in startups. You read about Sequoia and their tremendous and legendary achievements. You pick up the phone and you go nowhere. You can't just pick up the phone and either call your broker even if you have an account at Goldman's hey, get me some Sequoia. That's not working today very well. So the reality is that we set up our crowd so that literally millions and millions of people can have access to both quality venture capital funds, which are distributed and diversified portfolios, as well as actually picking their individual deals companies that really resonate with their value system or their interests and then you can put a piece of your assets into this exciting class.
Speaker 2:We do all the curation and the management of these investments and so, 10 years into this, we're managing about $2.5 billion of assets, half billion dollars of assets. We've invested in about 500 different companies, of which 66 have been actually 67 this week now have been exited successfully. We have about 60 different funds that people can choose from and we're a global crowd. Right. We have about a quarter million investors from all over the world. They're what are called accredited investors. These are people who meet criteria, according to the SEC, with like a million dollars of assets in America, Would you believe? By the way, there are 20 million accredited households in America, Wow.
Speaker 1:No no idea.
Speaker 2:Something should be celebrated in terms of America's success, but in any event, we make these deals available. You go to our crowdcom, you join our community and you can start hopefully having some fun and making some money, god willing, you know, by investing in great, great startups today very heavily in the AI area. You know by investing in great, great startups today very heavily in the AI area. You know, if you look at what we're investing in, it's AI, ai and more AI. Not just, you know, your LLMs or Gen AI, but all kinds of vertical strategies gen AI, but all kinds of vertical strategies. But we also do lots of medical deals and cybersecurity and semiconductors and energy and mobility and space, and it's fun.
Speaker 2:It's a great site where you can see sort of interesting companies. Every week we send out a newsletter to our members which just captures the news of this monster and there's a lot okay, because our companies are really across the board on the front lines of innovation. I'm based here in Jerusalem, israel, which is the heart or one of the hearts of Startup Nation, and we're alive and kicking and well, even despite the difficult situation in our region lately, but it's been a wonderful period in the next 10 years of our crowd. I think we're going to be much better yet.
Speaker 1:Fantastic. I love your newsletter and I'm not an accredited investor. We don't have a commercial relationship. Maybe I I'm not an accredited investor. We don't have a commercial relationship. Maybe I need to become an accredited investor because this sounds like an amazing relationship. Maybe describe how you identify and select startups for investment. What does that process look like?
Speaker 2:Well see, in the venture world there really is no good information source, right? It's not like. These are public companies that have disclosure. Where you can, you know, start looking at their sales growth and their margins? Because that's you know, the government makes sure that all those companies publish. Good luck with the startups.
Speaker 2:Some have good numbers, some don't, you know, and especially if you're talking about very early stage companies, you're pretty much investing in people with ideas who haven't even built the product yet. So you're doing a lot of sort of investing in people looking at where the future is going and getting out, usually a little bit over your skis. And therefore, in Hebrew, by the way, the way we describe venture capital is hon sikun, which means danger capital. It's not the nicest and easiest of asset classes. Therefore, you must be diversified, right? You don't just pick one number on a roulette table. God forbid, this is not roulette. You don't just pick one little company and try to invest in it. You have to have a diversified portfolio, because many, many of these startups will die and fail, and that's noble and wonderful and actually makes their founders more likely to succeed in time two and times three. But in any event, we do all kinds of sourcing of deals from other founders, from our investors, from other venture funds, from you know reading websites and newspapers, even those old things.
Speaker 2:You know, you have no idea where we track down deals and then our deals, by the way, come from all over the world. About 50% of our investments are here in our local, very exciting ecosystem in Israel, but about 50% of our deals right now are overseas, mostly in America, but ranging from Asia to Latin America, to Europe, australia. They're everywhere. So we look, we diligence them, we then have to negotiate terms okay, where because, remember, these are private companies, they don't have a publicly listed price, so you have to, you know, agree upon what their value is and how much money you're investing and what other terms there are.
Speaker 2:And this gets to be tricky because there are things such as preferred stock and anti-dilution protection, and it's a whole language and world in and of itself which, of course, we're very familiar with. We do that and then we set it up for our members, who can then go to our website and then, either on the mobile app or on their laptop, they can literally invest for minimums of $10,000. We have people who invest $5 and $10 million per deal and with funds that we have, you can invest from $50,000 on up. So it's quite interesting. It's a sort of a new world and it's growing very fast because many companies today are staying private longer. It used to be that startups would take about seven years to get to an IPO. Today they're taking, on average, 14 or 15 years. So the private markets are expanding and it's critical that a lot more investors have access to be able to invest in this asset class.
Speaker 1:Very exciting and what are some of the factors that differentiate you from other venture capital firms or you know, investing entities out there from, you know crowdsourced investment, that kind of thing?
Speaker 2:How do you see yourself on this landscape of both the traditional venture capitalists and the fact that we initiate and we set terms and we lead, we take board seats and we're quite traditional in terms of the way we set up our deals, but we're quite innovative and entrepreneurial in the way that we source our funds.
Speaker 2:So a traditional venture fund goes out, raises $200, $500 million and then invests it over four or five years and then they go raise another one.
Speaker 2:What we're doing with what we call SPVs or special purpose vehicles, is creating a way that you can have a single company venture fund where you pick a company like Halo, which is one of our leading companies. It's a company that does AI chip accelerators for the edge, not for big data centers, but for laptops or phones or cars or IoT devices or cameras, and it's a very big market growing. Now that company just raised money at a $1.3 billion valuation and we, by the way, are investors from the very beginning at a fraction of that cost. And what happens is, when you set that up, you have to negotiate with the company or join an additional round. So it's traditional that way, but what's new about it is that you now, if you were accredited, or some of your listeners can actually pick that company and invest $10,000, $50,000, $100,000 and start to build your own portfolio of both angel investors maybe friends you know or other deals you access through an angel club but again, you're now able to do this individually and that's very, very new.
Speaker 1:Yeah, very new, very exciting, and so clearly you're an insider when it comes to Startup Nation and the amazing startups that are being created in your region. But how does it look globally, internationally? How do you ensure you're capturing the most promising startups around the world?
Speaker 2:because we're good investors and because we, uh, we're well connected. We've been around you know I've got a little bit of gray hair here, maybe a lot more on the beard, and uh, we know a lot of people and they respect us and they've worked with us and you know, you, you basically in the venture capital, it's no longer the, the, the smart money doesn't have to pay up. They have to basically prove their value. Right, the guys who have the hot companies can basically choose which investors they want. And there's a beauty contest going on because investors are expected not just to it's not like just picking a stock right, you're expected to actually add value.
Speaker 2:Meaning you got to help them raise more money. You got to help them hire key staff and management. You got to help them meet customers. You got to help them get on the press, help them meet customers. You got to help them get on the press. You got to help them figure out how to exit, how to take a company public or sell it an M&A transaction.
Speaker 2:So many of the founders who you're talking to, or the CEOs of these companies, are interviewing you. You think you're doing your due diligence on them, which you are, but they're doing the smart ones at least, are doing diligence on you and making sure that you have the value to bring to them. So as long as you have a track record and it's real, then you can get into these deals. But you've got to be very, very fast, you've got to be out there, you got to be aggressive and you've got to take risks, because the good ones will come. They'll be open for a little bit of time and you were either grabbing that opportunity and get jumping all you know both feet in or not, and if not, you'll look for the next deal.
Speaker 1:Or not, and if not, you'll look for the next deal, absolutely so. I'm on your email list. I see your updates. A fascinating and diverse array of startups. You mentioned things like AI, edge computing hot topics that I follow but what emerging technologies are you most excited about? You know looking forward, are you most excited?
Speaker 2:about you know looking forward.
Speaker 2:Look, I'm a believer that, in order for us to really avert some of the bad things that can happen to the planet, we need technology solutions. We don't just need some additional money poured into solar fields or wind farms, but we need all kinds of new technologies for the grid, for carbon sequestration, for energy efficiency. I mean, there's a ton of stuff that needs to be done, not to mention what's going on in the food area, you know, with half of our food from farm to fork being wasted. Okay, it's incredible. Between a third to a half of the food grown on the planet is is it doesn't make it to your mouth and um. So there's a lot of technology that is being developed around that that excites me on a, uh, visceral level as well as an intellectual level. And, uh, we have a company, for example, that just raised a chunk of money called Blue Green Water Technologies, and what these guys do is they attack toxic algal bloom, which is this scum that sits on lakes and makes them smell and poisonous, kills the aquatic life. You can't drink the water, and they've developed a special nano-encapsulated mitigating chemical which is EPA safe, and it sits and floats on a lake and it literally attacks the algae where it is and causes it to commit suicide.
Speaker 2:Now it turns out that this now fixes these lakes, which is a great thing. But guess what? This algae is responsible for about 7% or 8% of global greenhouse gas emissions because it's emitting methane, which is maybe 20 times worse than regular old carbon dioxide, which is maybe 20 times worse than regular old carbon dioxide. So by attacking this algae and killing it, you sink this methane into the bed. You know the ground of the lake, and guess what? You now get carbon credits.
Speaker 2:And so they've just done their first reservoir where they got you know, and so they've just done their first reservoir where they got, you know, literally a million dollars worth of carbon credits plus for a single lake. So here you have something which is going to clean up the world's waterways and clean up the air by getting rid of the methane. I mean, you don't get better than that, right? In other words, that's the kind of company where I believe that economic opportunity for blue-green water technology is huge and significant. But just both the bragging rights, whether it's on your golf course or in your handball court, or just the fact that you go home at night and say what did I do today?
Speaker 2:Well, I invested in a company that's cleaning up the world's water and trying to deal with global warming in a serious and innovative way. That's that's good.
Speaker 1:Wonderful mission. Wow, what a. What a great story. And, speaking of stories, you mentioned all of your exits. Congratulations on that and care to call any favorite children out in terms of startups that have benefited from your support and network and investment.
Speaker 2:Any names come to mind Lots Early investors before the IPO in a company called Beyond Meat which had a tremendous run to the moon in terms of their stock price. We got off close to the moon and it's come back down to earth lately how an incredible alternative meat company became worth $10 billion at its peak. We've invested in a company called Rewalk which provides an exoskeleton for paraplegics who can walk. Again, they had a tremendous IPO. We made money and exited for our people there and again I feel that's really a double bottom line, both making money and doing good. You know, we were investors in Lemonade, which is a company using AI to do next generation insurance, and that company also peaked at near $10 billion and we got out about that time as well. And we were early private investors there with Daniel Schreiber and his fine team. It's an excellent company, you know, and many, many more. Right week we had an exit in a company called InnoValve which makes a transmitral catheter-deployed valve replacement that is non-invasive, relatively comes in through the femoral artery, and this was just bought by Edwards and we made about and this was just bought by Edwards and we made about nine times our money in about four years on that investment. So our investors did so. We're very happy for that transaction.
Speaker 2:And look, right now we're big on quantum computing. We believe that quantum is going to be a big thing and we've got a bunch of great companies in that area. We are obviously from Cyber Security Central. You've probably been watching the news about. Is Google buying Wizz for $23 billion? Yes or no Two days ago? Yes, today, who knows? Okay, but Israel is very, very strong in this area of cybersecurity and we've got a great portfolio of a few dozen companies. We're doing great work there, including a company called BioCatch who basically can identify who you are by how you hold and touch your phone. Would you believe that everybody has a unique signature? Okay, literally. And this company is now being used by over 200 of the world's leading banks and is an amazing company that's preventing fraud and identity theft from stealing our money and is doing very, very well. Was just a majority was just acquired by a private equity group. Value was over a billion dollars. And, again, we were early stage investors in that company called BioCatch.
Speaker 2:And we go on and on and on. I mean I like what's going on in the automotive and mobility space. We have a company called C2A which we helped incubate. It was co -founded by someone who was one of the co-founders of NDS, which was sold back in the day to News Corp for actually. Cisco bought it for about $5 billion. It was bought by News Corp earlier and so he left and he set this company up.
Speaker 2:And what C2A does is it helps secure what seems to be the innocent little EV charging stations we're seeing everywhere. Right, you go up and you park in a parking lot and you pull your you know credit card or whatever out and you plug in and you feel everything's wonderful until your identity is completely stolen and you're really, uh, potentially screwed, because this has become a huge way for people to essentially get access to your car and get access to a lot of things through this connection. So it turns out that C2A has the world's leading way of securing that weak hole. We have another company called Connected Energy out of the UK who were using depleted EV batteries to build big storage units. It turns out that when your battery is depleted, even by 20% capacity, you got to recycle it, which is a horrible thing. Take a battery it's got 80% capacity and get rid of it. My mother would have been outraged. She was an old garage sale, denizen, and the bottom line is that what they're doing is taking them and giving these batteries a second life, stacking them up in old shipping containers and creating these incredible storage units with smart software and smart hardware that are using these batteries for a second time and extending their life for maybe five or six or seven more years.
Speaker 2:So you know, there are all kinds of companies that are in the data space that are some are fun, some are doing, you know, video production using AI. Some are, you know, doing you know, call center work. We have a digital bank called One Zero, which is one of the six banks licensed to operate in Israel all digital, with already like 100,000,. You know clients, many of them, who are actually buying bundles of services. So you don't have to pay, you know, crazy fees to your bank. You pay one flat fee and you got that.
Speaker 2:You know there's so much going on in the world and I'll tell you one thing it keeps me young, because I fall in love with these companies, maybe sometimes to a fault. That's why I have a lot of skeptical people around me who keep me honest, but the reality is that you see the fire in the entrepreneur's eyes, you hear their passion and it's infectious and it makes you believe that the world's going to be a better place, that there are good people out there doing good things and that it's, you know, capitalism. The good side is not bad. It's about, you know, not just splitting the pie unevenly or unfairly. It's about growing the pie, it's about solving problems, it's about helping people and, I think, by and large, the startup community in Silicon Valley, in Israel, in other hotspots around the world are good people and being surrounded by them, helping them raise money, being an enabler of their dreams, is a real blessing.
Speaker 2:I'm very lucky.
Speaker 1:Wow, your enthusiasm is so infectious and sounds like I need to get some of those founders on my little show here. Not so little. A few said earlier, most startups fail and there's so many unpredictable factors. What's your philosophy there?
Speaker 2:Look, you have to be very, very serious about risk and you know we have risk committees and we're always evaluating how to mitigate it. But we live in a very risky world, right? We're in a world today where wars break out and where natural disasters happen and you know, bubbles burst and stocks go up and go down. We've seen it happen so many times in so many cycles in our lifetimes Certainly in my lifetime I've seen it repeatedly and the best risk, in my opinion, is, first of all, to stay on top of your investments.
Speaker 2:You cannot ignore these companies you have to be engaged with them and that's why having an intermediary like our crowd, and that's why having an intermediary like our crowd who's managing, you know the relationship with these companies and sitting on boards and trying to collect advantage of the fact that others are sort of, you know, try to grab more of the company. It could be that the company's in trouble and it needs funding quickly and you need to, you know, put your shoulder to the wheel and push and make sure it can get over this little hump. That's one part of it. The other part of it is making sure that you have a portfolio, because in venture capital, the worst thing that happens when you make an investment is you lose your money. That's bad. By the way, most people aren't used to losing all their money. That's something you've got to get used to.
Speaker 2:In venture capital, when you invest in a company, the company fails. It's not like you get 30% or 40% of your money back. You lose it all. But if you have a portfolio where you've taken your $100,000 and you've split it into 10 bytes of 10,000, then, yeah, you might lose a few of them probably will, but hopefully a few of them probably will, but hopefully a few of them will go up and when you win you don't just make 20% or 30%. In many cases you make 5% or 10% or even 20%. Or if you're really lucky and smart, you can get these sort of legendary returns where you make 50% and 100% times your money. But don't count on that. But if you do this right and you do get enough shots on goal, you'll get some that and you do the right kind of people, you'll get some that will do the five and the 10x and if you get enough of those, they cover up for a lot of mistakes and that's the best way to really mitigate risk in this business.
Speaker 1:That's the best way to really mitigate risk in this business. Well said, and it's no secret that the venture capital community is under pressure, probably overspent, overindulged, for quite some time. How do you see that rolling out? How do you see that rolling out, and do you have any lessons learned on your end that you could impart in terms of the mistakes that some of the traditional VCs have made and some of the challenges and strains they're under right now?
Speaker 2:Look, I think that you don't want to smoke your own air supply. I'm not sure that's the right analogy. Maybe my Berkeley past is affecting this, but the reality is that you can't let this stuff go to your head. Okay, and when you're sitting now in the most unbelievable bull market for AI the world has ever seen, right, you know people are using every possible superlative and incredible praise term you know to describe this moment in history, which is revolutionary and, by the way, I believe all of it, except that the way it translates into the market is not simple. It never is. It's not linear. The market, on the way to this greatness, is going to be up and down, and you've got to realize it. Remember, you know, it wasn't too long, 25 years ago or so, when the Internet, first Internet bubble, was here and we were all into that, 1999 goodness. And oh boy, was that amazing. Everything's going to be incredible.
Speaker 2:And then 2000 came along, april and May, and then the thing started falling apart. And then what happened is a stupid money abandoned the internet. They said, yeah, eyeballs, who cares? And then, all of a sudden, there were people like Google who came along, and we all know how that's turned out. Okay, they came along really after that 2000 period of time when they, you know, really broke out, and so you've got to be careful both to realize that things get ahead of themselves. They get overextended. You've got to make sure that you take advantage of things that are going up, sell parts of your holdings on the way up and don't ever regret selling at a profit, and then make sure that when things get really bubblicious, you're taking a hard look and saying maybe it's time to exit this position. Okay.
Speaker 2:On the other hand, maybe you've got yourself the next Apple or the next Nvidia and people who thought they should exit a couple of years ago. They weren't right. The thing is continue to move up. So you've got to be, I think, constantly checking your gut. Do this as a group event, do it with your wife, your kids, your family. Probably people our age are investing on behalf of their kids and their future anyway, which is a good way to look at venture capital because it's a long-range affair. Get them involved they know a lot about this stuff, you know and get their advice and make sure that you have the majority of your money with professionals, with you know, big, solid firms, and then use, you know a few percent 5%, 10% you know of your holdings, if you've got enough of them and invest in things that are allowing you to get a little bit more alpha, a little bit more excitement and a way to both impact the world as well as your own personal account. That's my advice.
Speaker 1:Well, wonderful advice. That's my advice. Well, wonderful advice. Practical advice, much appreciated as we're in the dog days of summer here. Any plans personally, professionally, with the ArcRoute team? What are you up to the next couple of months?
Speaker 2:Well, first of all, I'm trying to get out to the mountains over the next couple of weeks and I hope to do so Taking my own family, which now with 15 grandchildren and four kids and spouses.
Speaker 2:It's sort of like industrial-style tourism getting out to have some fun on an island somewhere. But I've got a lot going on at our crowd. There's just, you know, no rest for the weary. There's a lot of excitement. Come to our site to check it out, get our newsletter and let me know what you think I mean, evan. I've enjoyed this conversation a real lot and I hope that we'll stay in touch and look forward to coming back with, hopefully, some more good news in the future.
Speaker 1:Absolutely Well. Thanks so much for sharing your vision extraordinary and the mission of our crowd and thanks everyone for reaching. Yeah. I would encourage you to go to the website, sign up for the newsletter. Really a tour de force of incredible companies out there. What a wonderful way to keep on top of the industry. Thanks, john, thanks everyone.