How you make money
Once you have made an investment in a startup, you will hold private equity in that company. The value of your stake in the company may increase or decrease over time depending on how the company performs. You will receive cash or stock return on your investment if and when a positive liquidity event occurs – for example, as a result of the company going public or getting acquired by another company. Please bear in mind that startup investments are long-term investments that may take years to become liquid, if they do at all.
How OurCrowd makes money
OurCrowd receives a 20% carried interest, defined as 20% of the profits in an exit event in respect of profits up to 5x the investment amount and OurCrowd fees vs Venture Capital Feesa carried interest of 25% on such profits thereafter. OurCrowd receives a management fee of 2% of funds raised for the first four years of the investment vehicle’s eight-year life. OurCrowd also receives an administration fee of 4% of the funds raised, which is held in escrow to pay for expenses of the investment vehicle.
Is it safe?
For investments in startups, total loss of capital is a highly likely outcome. Investing in startups involves a high level of risk and you should not invest any funds unless you are able to bear the entire loss of the investment.