1/2: Provide an overview and details about the Israeli startup scene: Market size and major players.
Israeli startups raised around $237mln through crowdfunding platforms in 2016. In the first half of 2017, they raised $173mln, which accounts for 73% of the overall sum from the previous year. In the last five years, 145 Israel-linked startups were funded through crowdfunding platforms, with 52 investments made in 2016. Major players in this space are OurCrowd, which has 68% of the deals, and iAngels Crowd, with 30%. Also, ExitValley has 6% share, and Pipelbiz has 5% share. Since all of them are private companies, their financials aren't disclosed. According to my triangulation, based on Owler's estimation, the annual revenue of crowdfunding platforms in Israel is about $5.06mln.
CROWDFUNDING FOR STARTUPS IN ISRAEL
Until this year, private Israeli companies were only allowed to raise funding from banks, institutional investors, venture funds, or a group of 35 or less accredited investors. New regulations that allow investments from the public through crowdfunding platforms have only become effective this month. Therefore, the industry will likely transform in the coming years. As of now, 58% of all portfolio companies of crowdfunding platforms are seed or early stage, with 55% being Internet or software startups.
Please note that my research only focuses on market size and major players in the crowdfunding for startups space, as requested under "What does success look like?" I assumed that the second part of the request will cover different aspects of the Israeli startup scene.
After reviewing several related industry reports from different regions for comparison purposes, as well as reports on the crowdfunding market in Israel and articles in tech media, I determined that most sources provide the fundraising volume as the indicator of how the industry is performing. As I wasn't sure if it would be sufficient, I also estimated the annual revenue of crowdfunding platforms and included the number of companies funded this way.
In the first half of 2017, Israel-linked startups raised $173mln through crowdfunding platforms. With this result, IVC Research Center, an Israeli-based research company, predicted that 2017 would be a good year for Israeli crowdfunding. It accounted for 73% of the overall sum raised in 2016. While the final result for 2017 is not available yet, I calculated that in 2016, the fundraising volume was about $237mln:
The information on the yearly revenue of crowdfunding platforms in Israel is not available. While the free summary of the report by IVC Research Center provides the market shares of the major players, they are all private companies, and their financials aren't disclosed. Owler estimates OurCrowd's revenue at $4.1mln. Its market share (in terms of capital invested) is 81%. Therefore, a triangulated revenue of all crowdfunding platforms would be:
Please note that the market share is based on the share of capital invested (I chose it over the percentage of deals, because those companies tend to charge startups based on the success of the campaigns). A more precise triangulation was impossible, as there was too little financial data on particular companies in press releases, industry reports, and articles.
NUMBER OF COMPANIES/INVESTMENTS
According to the report by IVC, 145 Israel-linked startups were funded through crowdfunding platforms in the last five years. While the yearly breakdown is not available, there is information about the number of investments. In 2016, there were 34 first investments and 18 follow-on investments, which makes 52 investments in total. In the first half of 2017, there were 21 first-time and 15 follow-on investments (36 in total).
OurCrowd is by far the most dominant crowdfunding platform for startups, with 58% of the deals and 81% of the capital invested. It's based in Jerusalem. 130 companies were funded through OurCrowd, with 7,200 vetted ones. There are 20,000 accredited investors on the platform. It has raised $500mln.
iAngels Crowd is responsible for 30% of the crowdfunding deals, but only 15% of the capital invested. The company is based in Tel-Aviv. Investors can choose between the account managed by iAngels or a self-managed one. The minimum investment per startup is $10,000.
6% of the crowdfunding deals happen through ExitValley, though the platform doesn't stand out in terms of the capital invested. It was formed by entrepreneurs, lawyers, investors, and capital market people to level opportunities for startups and investors.
Pipelbiz is responsible for 5% of all crowdfunding deals in Israel. Like ExitValley, it doesn't stand out in terms of capital invested. The company doesn't have an English version of the website. Companies which choose to raise funds through Pipelbiz have to pay 7% of funds raised.
In conclusion, in 2016, the fundraising volume on Israeli crowdfunding platforms was $237mln. Their revenue was approximately $5.06mln. There were 52 new deals, including first-time and follow-on investments. The two most dominant players are OurCrowd and IAngels Crowd, with 58% and 30% deals, respectively. Two other important platforms are ExitValley (6% of the deals) and (5% of the deals).