With so many investing and trading platforms available, it can sometimes feel overwhelming trying to find the one that’s best for you. OurCrowd is an online platform that allows users to invest in startups, and it has quickly become a popular choice for many investors.
In this OurCrowd review, we’ll take a look at everything the platform has to offer, including its fees, minimum investments, features, and safety.
What Is OurCrowd?
OurCrowd was founded in 2013 by serial entrepreneur Jon Medved. The company is based in Jerusalem, but it has offices in 15+ cities around the world.
OurCrowd is a bit different than most investing platforms. Rather than investing in established companies through a stock exchange, OurCrowd allows users to invest in early-stage startups.
You can think of OurCrowd as a mix between Kickstarter and AngelList. Just like on Kickstarter, startups post campaigns on OurCrowd in order to raise money. But instead of small donations from the general public, OurCrowd deals with accredited investors who are willing to invest larger sums of money.
Who Is OurCrowd For?
As investment platforms go, OurCrowd is fairly exclusive. That’s because it’s not open to everyone—in order to invest, you must be an accredited investor.
An accredited investor is somebody who meets one of the following criteria:
- Has an annual income of $200,000 (or $300,000 jointly with a spouse) for each of the last two years and expects to maintain that same level of income in the current year
- Has a net worth of $1 million or more, either alone or together with a spouse
- Is a “qualified institutional buyer” as defined in Rule 144A under the Securities Act of 1933
If you meet those criteria, then OurCrowd is definitely worth considering as an investment platform. But if you don’t, then you’ll need to look elsewhere.
Note: OurCrowd is available globally, with the exception of a few sanctioned countries.
Is OurCrowd An Angel Investing Website?
Yes, OurCrowd brings angel investing to people who have less money than the usual angel investor. It is hard for anyone who doesn’t have hundreds of millions of dollars to find a company to invest in. This is where OurCrowd comes in.
However, based on the minimum requirement, you would still need to have substantial wealth in order to start investing with OurCrowd.
What Investing Options Does OurCrowd Offer?
OurCrowd is a versatile investment platform that offers investors with not one, not two, but three avenues for investing in startups.
Let’s do a quick breakdown of the options:
Startup Select – Minimum Investment $10,000
This is OurCrowd’s flagship investment product. With Startup Select, you can choose to invest in any of the startups that are featured on OurCrowd’s website.
You can filter the startups by sector, stage, region, and more. And OurCrowd provides extensive due diligence on each one of the startups before they’re ever featured on the site—more on that later.
Funds – Minimum Investment $100,000
If you’re not interested in picking and choosing individual startups, OurCrowd also offers a selection of funds that invest in groups of startups. These funds are managed by OurCrowd’s team of investment professionals, so they do the work of picking and choosing startups for you.
OurCrowd has 39 funds to choose from at the time of writing. These include funds built around sectors (e.g., OurCrowd FoodTech Fund) and funds managed by venture capital firms (e.g., Glilot+).
Portfolio Reserve – Minimum Investment $250,000
The Portfolio Reserve is OurCrowd’s VIP, managed account service. With this service, you give OurCrowd’s team complete control over your investments. They’ll create a portfolio of startups for you and manage it on an ongoing basis, making sure that it’s properly diversified and aligns with your investment goals.
When you sign up for Portfolio Reserve, your portfolio is allocated into all companies funding on the platform (plus exclusive “offline” companies).
Does OurCrowd Charge Any Fees?
As with any investment platform, fees are something you should definitely be thinking about. And when you invest with OurCrowd, there are three kinds of fees you may need to pay:
- Management Fees: Fees paid to OurCrowd for the management of your investment (e.g., the OurCrowd team’s due diligence on startups, etc.).
- Administration Fees: Fees paid to OurCrowd for the administration of your investment (e.g., processing paperwork, maintaining records, etc.).
- Carried Interest: A portion of any profits that OurCrowd keeps as compensation for their services.
Here’s a breakdown of OurCrowd’s fee structure for companies and funds:
|Management Fees||2% annually||1.5% – 2.5% annually|
|Carried Interest||Returns ≤ 5X: 20% Returns > 5X: 25%||20%|
Although OurCrowd’s fees are considered high, what you are paying for is the company’s extensive vetting of the companies they present. There will be no hidden fees, everything will be presented to you when you do your deal with them.
OurCrowd Fees Example
These fees can add up quickly. To illustrate, let’s say we invest $1,120,000 in a company through Startup Select. At exit, we get $6,000,000 as a payout.
The fees would be:
- Management Fees: $80,000 (2% over 4 years)
- Administration Fees: $40,000 (one-time fee of 4%)
- Carried Interest: $1,500,000 (Return > 5X)
How Does OurCrowd Vet Companies?
Now that we’ve covered the basics of what OurCrowd is, let’s take a more in-depth look at how the company works—namely, it’s vetting processes. After all, investing in early-stage startups can be risky!
OurCrowd’s vetting process is pretty involved, consisting of five stages:
- Initial Contact: Startups are free to reach out to OurCrowd’s team for consideration, and many founders do. OurCrowd receives over a thousand applications every year.
- Pitch Meeting: If OurCrowd thinks a company is a good fit for the platform and its investors, they’ll schedule a pitch meeting. Here, OurCrowd’s team will grill the startup founder on their business model, market opportunity, competitive landscape, and more.
- Due Diligence: If OurCrowd likes what they hear in the pitch meeting, they’ll move on to due diligence. This is where OurCrowd really digs into a company’s financials and growth potential. They’ll look at things like historical financials (if available), burn rate, cap table, and more. OurCrowd also does reference checks with the startup’s customers, partners, and employees during this stage.
- Investment Committee: Once OurCrowd’s team is satisfied with a company’s due diligence, it goes before OurCrowd’s investment committee for final approval. This group consists of OurCrowd’s CEO and CIO, as well as OurCrowd’s external investment committee.
- Term Sheet: If OurCrowd’s investment committee approves a company, OurCrowd will send them a term sheet. This document outlines OurCrowd’s investment offer—which the startup can either accept or reject.
Like we said, the process is pretty thorough. And as an added benefit, due diligence research and pitch materials are made available to the platform’s prospective investors. This transparency is something that really sets OurCrowd apart from similar platforms.
How Has OurCrowd Performed?
When you’re trying to understand how well OurCrowd has performed, it makes sense to look into some of the company’s many exits.
Some of the most notable exits include:
- Beyond Meat → NASDAQ ($1.46B)
- Lemonade → NYSE ($1.6B)
- Magisto → Vimeo ($200M)
- CyberX → Microsoft ($165M)
- Cognio → NetApp ($70M)
These are high profile exits that any venture capital firm would be proud of. OurCrowd’s exits have averaged a return of 3.4x over the life of the investment, which is pretty impressive.
It’s also worth noting that OurCrowd was an early investor in several of these companies, which means they had a higher upside potential. For example, OurCrowd invested in Beyond Meat in 2015 when the company was valued at just $17 million. And they held onto their shares until the company’s IPO in 2019, when it was valued at $1.46 billion.
Of course, not all of OurCrowd’s investments have been quite so successful. The company also has some notable write-offs.
How To Get Started With OurCrowd
Now that we’ve gone over what OurCrowd is and how it works, you’re probably wondering how you can get started with investing.
The process is pretty simple:
1. Create an account.
The first step is to create an account on OurCrowd’s website. You’ll need to provide some basic information, like your name and email address. OurCrowd will also need to know your accreditation status, which you’ll need to back up with evidence.
2. Complete your profile.
Once you’ve created an account, you’ll need to complete your investor profile. This is where OurCrowd will collect more detailed information about you, including your investment goals and risk tolerance. OurCrowd uses this information to match you with appropriate investments.
3. Fund your account.
Once your investor profile is complete, you’ll need to fund your account. OurCrowd accepts payments via wire transfer, ACH, or check. The minimum investment amount is $10,000.
4. Start investing.
After your account is funded, you’re ready to start investing! OurCrowd will provide you with a list of startups that match your investment criteria. From there, you can research the companies and decide which ones you want to invest in.
OurCrowd is definitely an interesting (and highly promising) option for accredited investors who want to get involved in startup investing. The platform provides access to a number of exclusive benefits, including:
- Pre-screened investments: OurCrowd does the heavy lifting when it comes to due diligence, so you can be confident that all of the startups on the platform are high-quality.
- Expert guidance: OurCrowd’s team of experts can provide valuable insights and guidance when it comes to making investment decisions.
- Potential for high returns: OurCrowd’s portfolio of companies has generated some impressive exits, which means there’s potential for strong returns on investment.
If you’re looking for a hands-off way to invest in startups, OurCrowd is definitely worth considering. However, it’s important to keep in mind that there are also some risks involved.
As with any investment, there’s always a chance that you could lose money. OurCrowd’s investments are also relatively illiquid, which means you may have to wait awhile before you can cash out.