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The Next Generation of Crowdfunding

Crowdfunding platforms have paved the way for the formation of a blossoming community that supports and finances excellent ideas from all ends of the spectrum. Until recently, backers were not offered any kind of partnership or return on their investment. If a funded project became a worldwide success, investors would receive a note of thanks or in the best-case scenario, a version of the product they financed.

At ExitValley we have taken the concept a couple of steps further by combining the familiar crowdfunding platform with the world of investments and creating a ‘crowd investing’ platform. The ExitValley platform enables everybody to invest in Israeli startups and small businesses, in return for actual shares!

The idea is quite straightforward: Entrepreneurs take the sum they wish to raise and divide it up into small portions, thus allowing many more people to invest. Now anyone can be a shareholding partner in an attractive, up and coming, young company.

Why You Should Invest in Startups

Waze, Viber and Wix are just a part of the success story of the Israeli hi-tech industry. Over the last decade, every dollar that has been invested in Israeli hi-tech has yielded a return of more than 3 dollars. The interest surrounding Israel as a startup superpower is only increasing. Despite its small size, Israel takes centerstage among leading technological countries of the world. In last decade alone, more than 750 Israeli startups were sold, resulting in deals that lined investors' pockets with more than 50 billion dollars.

Startup investments are also known as Venture Capital investments. Venture Capital investments have a reputation for being high risk, yet at the same time, the returns are likely to be disproportionately higher than other investment opportunities presently open to you. Due to the risks involved, it is recommended that you determine the sum you wish to invest and divide it up between 3-4 different startups and small businesses, thus spreading the risk and creating a varied investment portfolio that will increase your chances of success.

An investment with ExitValley is an opportunity to be part of the next great thing – Here you can invest in companies that interest you and in which you have identified potential. Partner with them from the initial stages, follow their progress, and watch them grow and succeed. Your investment is designed to support great ideas and is likely to assist in the creation of new employment opportunities and contribute to economic growth.

Investing with ExitValley

  • Now everyone can

    Previously, access to the most profitable investments was reserved for a small group of investors. At ExitValley, we have put a great deal of effort into removing the obstacles that have prevented you from investing in these companies until now. We have paved the way for you to invest in a variety of companies, depending to your areas of interest:
    • You can also invest small sums.
    • You can create a portfolio of varied investments and select projects are close to your heart.
    • You can liquidate your investment at any time.
    • As well as providing encouragement & support, you can actively assist and invest in a friend, relative or charismatic entrepreneur.

  • The simplicity and security of a standard investment agreement

    If you have ever attempted to invest in small private companies, you certainly know about the amount of energy and resources that investments of this type can consume: Spending time reading and understanding legal agreements, conducting protracted negotiations regarding transactional details, spending large sums of money on lawyers, accountants and so forth. All of these are things of the past!
    At ExitValley we have commissioned leading attorneys in the field, and together we created a uniformed legal infrastructure with binding standards, the main aim of which is to streamline the process and safeguard your rights as investors.
    It has never been so safe and easy to invest in startups!

  • Transparency after funds have been raised

    After a fundraising campaign has been successfully completed, a special company communication panel will appear on the platform. This panel will only be available to investors and the company and it is designed to manage the relationship between them. Stay up to date with: Relevant notices, summons to shareholder meetings, performance results, etc. 

  • Liquidity

    Standard startup investment contracts do not permit investors to sell their shares until a company has been sold. We at ExitValley understand that liquidity is an important matter for investors. Therefore, we have facilitated a swift and simple process whereby you can sell your shares, starting from 3 months after the purchase date, subject to buyer availability. Furthermore, as a shareholder in the company, you will also be notified of incoming offers (if you so choose) from potential purchasers, as we pave the way towards the next Exit.

  • You are not alone

    We supply you with the best tools for making an intelligent investment. All of the company's relevant data is displayed on the platform in a convenient and user-friendly way. You can make contact with the entrepreneurs and ask all the questions that matter to you. You can also consult with other investors on the platform, follow leading investors and exchange notes of interest.

What to Expect

With us the investment process is quick and simple:

A. Search for interesting companies

  • You can make an independent search according to categories, or by following other investors.
  • Companies listed on our platform will supply you with all the information required for an investment, including: Business plan, budget, presentation and video.
  • Contact the entrepreneurs with the aim of obtaining further details about the company and consult with other investors on the platform.

B. Invest the sum you want

  • Each fundraising campaign sets its fundraising target and time span (ranging from 30 to 60 days).
  • After you have made an investment, your money will be transferred to an escrow account that has been opened for that specific company.
  • If the campaign reaches its fundraising target, the transaction will go ahead – Your shares will be transferred to you and the money will be transferred to the company. If the campaign does not reach its fundraising target, your money will be repaid in full.

C. Be a part of the company

  • After the successful funding and transferal of shares, we create for you and for the company you have invested in a unique panel on the platform, which will enable you to stay in touch with each other, receive ongoing updates and exercise your rights as shareholder.
  • From this moment on you can note whether you are willing to receive offers for the purchase of your shares and you will be free to take advantage of such offers. 

Protecting Investors

Together with the top lawyers in the field, we at ExitValley have created a uniformed legal infrastructure with binding standards for all companies that raise money with us. The main objective is to simplify the whole procedure and to preserve investors' rights. Never has it been so straightforward and safe to invest in startups:

  • Legal Checklist
    Every company wishing to raise money at ExitValley has undergone a procedure of checks. These include: legal and background checks of both the entrepreneurs and the company. The purpose of this procedure is to monitor and stamp out, as far as possible, frauds, as well as to increase the investor's level of certainty in the investment.
  • Escrow
    The escrow procedure has been put in place to ensure that the investors' funds are held by a trustee in a special trust account that will be open for the duration of the fundraising campaign. Funds are only transferred to the company’s account if the investment campaign has been successfully funded and completed.

    In order to receive their investment funds each company must fulfill the following conditions:

    o The company must reach the campaign fundraising target.
    o The company must adopt new Articles of Association.
    o The company must be duly incorporated at the Registrar of Companies.

    Only after the company has fulfilled these conditions will the trustee transfer the investment funds from the trust account to the company. Within this framework we have selected ESOP Excellence Co., one of the leading trust companies in Israel, to act as ExitValley's trustee.
  • Uniform Investment Agreement for All the Investors
    The objective of the uniform investment agreement is to create an identical layer of investors holding identical shares without differences and without preferences (apart from the number of shares held). Companies raising funds through ExitValley allot to their investors ordinary shares, not preferred shares. Thus, the shares held by each investor, as well as the company, are identical. In other words, each share is of equal right.
  • Presentation of the Budget
    One of the most important documents that the fundraising company is required to present to its investors is the budget. Thus, great emphasis is placed on the designation of the investment funds. This requirement obligates the company to work according to the budget guidelines and constraints without any significant deviations. By demanding publication of the company's budget, we reinforce transparency for the investors and compel the company to use the funds invested in it in accordance with what has been agreed in advance.
  • 5 Highest Paid Employees Report
    Just like the publication of budget requirement, the purpose of this report is to ensure transparency between the fundraising company and its investors. Even before making the investment decision, investors can view the founders’ and directors' salaries and/or their anticipated future salary, plus track significant changes.
  • The Founders' Personal Commitment
    In ordinary investment agreements, there is a difference between the company's liability towards its investors and the company founders’ liability towards investors. In the event of a breach of contract, ExitValley's legal structure dictates that the founders are directly liable to their investors.
  • Obligation to Report to Investors Post-Funding
    Borrowed from the world of public companies, we believe that companies and those standing at their helm have reporting duties vis-à-vis their shareholders. It is important that the investors stay informed, all along the way. As well as providing transparency and communication tools, ExitValley also stipulates that the company is obliged to keep investors updated regarding its financial status and goings on via quarterly/annual reports that have been audited by an accountant.
  • Mechanism for Preserving the Entrepreneurs' Responsibility Towards the Company (Repurchase Right)
    The purpose of this mechanism is to insure the commitment of all the founders towards the promotion, development and benefit of the company. Therefore, under this mechanism, a founder who leaves the company during the critical stages of its development shall lose part of his/her shares. Following investment, it is in the entrepreneurs’ interest to remain with the company and contribute to its growth, because if they leave, their holding will be significantly reduced – all subject to the contents of the Articles of Association.
  • Tag-along
    The purpose of this mechanism is to create uniformity in the sale rights between founders and investors. This mechanism defines that the investors shall be entitled to participate in any transaction involving the sale of any of the founders' shares in the company – all subject to the contents of the Articles of Association.
  • Pre-emptive
    The purpose of this mechanism is to reserve for the investors the option to join any further round of fundraising by the company in the future so that their holding will not automatically be diluted in such an event – all subject to the contents of the Articles of Association.
  • Transactions with Interested Parties
    The purpose of this mechanism is to prevent the founders and key personnel of the company from making transactions with interested parties that may be detrimental to the company. Such transactions cannot be made without obtaining prior approval from the investors, the special majority – all subject to the contents of the Articles of Association.
  • Prohibition Against the Distribution of Dividends During the First Two Years
    The purpose of this mechanism is to prevent the founders and the principal shareholders of the company from wasting the money that they have only just raised by withdrawing dividends. The period of time following fundraising is critical for the company. This section ensures that the investment funds, during the course of the two years following fundraising, will be used solely for the company's development and advancement – all subject to the contents of the Articles of Association.
  • * Subject to the article of association and the SPA of the fundraising company

How Much Does it Cost

  • Nothing, beyond your investment money of course. Exitvalley's campaign management fee is only charged to the fundraising companies.
  • When you wish to sell the shares in your possession, the sales commission will be 5% (net).

 

 
The financing rounds, made through the ExitValley platform, are in accordance with a model of statutory exemption from publishing a prospectus pursuant to sections 15A(A)(1) and 15A(A)(7) of the Israeli Securities Law - 1968.
Under this model, the disclosure of detailed information on the company and information about the investment in each round of financing are limited to not more than 35 investors, who are not qualified investors, and the round of financing is not in the format of an offering arrangement ("רכז הצעה"), as defined in the Securities Law.
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