Monday 22 Apr 2024
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SINGAPORE (March 3): United Overseas Bank (UOB) has invested US$10 million ($13.9 million) for an undisclosed stake in equity crowdfunding platform OurCrowd, in a bid to fill a gap in funding needs of SMEs and start-ups in Asia.

Equity crowd-funding is an emerging form of fund raising, where multiple investors on board a dedicated platform, like OurCrowd, pool relatively small amounts of capital for shares in a multitude of companies chosen to receive the investments.

UOB and Israel-based OurCrowd aim to connect the millions of SMEs here in this region, and match them with accredited investors looking for the next hit. UOB claims strong ties with many SMEs in this region. This partnership with OurCrowd can be an extension of that. “Where the opportunities are, we are ready,” says Janet Young, UOB’s head of group channels and digitalization, at a media briefing on Thursday.

“This is a complete and holistic strategy to scale, expand, and be the next unicorn,” adds Young. She estimates that there are some 100,000 such accredited investors here in Singapore, defined by having annual income of more than $300,000 and assets of at least $2 million.

Among the investors here that are already on board include Sassoon Investment Corporation, the private investment holding company of the Sassoon family.

Equity crowdfunding makes particular sense for companies in technology, where the time between product development and market can be a long drawn process. “Who do they go to? Friends, and families, and then their own networks. Beyond that, it becomes difficult,” says Young.

“Equity is absolutely essential for start-ups in technology,” says Jon Medved, CEO of OurCrowd. Typically, their products need time to be ready for the market and the equity funding is essential for the start-ups to go through this phase.

Thus far, OurCrowd has raised US$200 million from various investors. It has amassed more than 11,000 investors and has put money into 93 companies. It has exited from four of them, including Trendlines, which listed recently on SGX. Another exit was exoskeleton maker ReWalk, listed on Nasdaq.

OurCrowd claims to have a very stringent screening process of where it wants to invest the funds, with just 2% of the companies making the cut. It claims to look through more than 2,000 companies a year. Its single largest investment so far was US$15 million.

OurCrowd helps amplify the networking effect as well. Medved says the investors are not merely a source of funding, but also a source of “value”.

For example, one of the companies invested by OurCrowd is Zoomcar, a car rental company in India, which was recommended to OurCrowd by one of its investors. Zoomcar is headed by an American CEO, and its market is India, and it raised funds from Israel.

“Investments used to be ‘hyper-local’ – where you can cycle to. Now, you can fund start-ups where you are. This is the way of the future,” says Medved.

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