In light of the recent ReWalk IPO, we’ll be hosting a webinar about IPOs: how they work and what they mean for your portfolio. Join OurCrowd partner Elan Zivotofsky to learn more about the IPO process and how early stage investors profit from this type of exit.
IPOs: How they work and what they mean for your portfolio
1. IPOs: How they work and what
they mean for your portfolio
An OurCrowd Investor
Education Webinar
2. Some background
Elan Zivotofsky
General Partner
Head of Investment Team
! 17 years experience investing in
Israeli companies
! MD Prelude Israel Fund
! SVP, Head of Tech Banking at
Lehman Brothers
! Israeli technology analyst at
Goldman Sachs
! Morgan Stanley technology
analyst
3. How IPOs work
Public vs Private
Effects on early investors
Process
4. Public vs Private
Going Public
! Portion of your company
traded on public exchange
! IPO: first time shares are
offered publicly
! Positives:
» Liquidity
» Credibility
“We’re going public for our
employees and our investors…
we’d work hard to make [their
equity] worth a lot and make it
liquid, and this IPO is fulfilling our
commitment.”
– Mark Zuckerberg
“Look at Benioff and Bezos,
they stole the microphone
and controlled the industry.
Neither said ‘I don’t want to
be public, someone might
look at my numbers’”
– Doug Leone, Sequoia
5. Public vs Private
Going Public
! More positives:
» Big capital base (avg US
startup raised $160M prior to
IPO, then $470M at IPO)
» Involve new class of investors
» New acquisition possibilities
! Drawbacks:
» Scrutiny of leadership
» Disclosures to SEC
» Earnings statements & a new
approach to investor
relations
“[public] companies
understand they’re owned
by shareholders… CEOs
must listen”
– Peter Weinberg
“Companies should be
rock solid, both financially
and technically, before
going public”
– Marc Andreessen
6. Private vs Public
Acquired by
founder for $25B
~$35B revenue
~$140B revenue
Acquired by
BRK.A for $23B
Staying (or going) Private
! Completely owned by
founders and/or investors
! Fewer disclosure
requirements
! Private doesn’t necessarily
mean small
! Reasons for staying private:
» Control (Michael Dell example)
» Reduced scrutiny and
disclosure requirements
» IPOs are very expensive
7. What does IPO mean for earlier investors?
Investment
Liquidity
Valuation boost
Potential dilution
Management
Equal information
Many private
investors exit
Board/investor
hand-off
9. The IPO Process: An Overview
Corporate decision is made
A privately owned company
decides to seek outside
investors in order to raise
money
Regulatory notification
The company submits a
detailed disclosure document
explaining its business,
financial results, strategies and
risk factors to the SEC
10. The IPO Process: An Overview
I-Bankers & Roadshows
An investment bank steps in at
this point, evaluating the
company and offering to
underwrite shares. They then
run a roadshow to generate
investor interest
A price is set
Before the IPO, the investment
bank sets a price based on
investor interest.
11. The IPO Process: An Overview
Opening price is set Public trading begins
12. The ReWalk Example
Timeline of a successful venture investment
ReWalk’s decision to go public
ReWalk’s IPO in context
13. ReWalk’s Story: Start to End
February 2013: Internal Round Opened
ReWalk opens a round of financing available only to
existing investors.
May 2013: OurCrowd wins access
After pursuing the deal, OurCrowd is the only new investor
to join the VCs in this closed round.
OurCrowd members get the opportunity to invest on the
same terms as OurCrowd and the VCs leading the round.
June 2013: OurCrowd members invest
- 57 individual OurCrowd members participate
- 9 different countries represented
- $23,150 average investment
- $1.3M total raised
14. September 2013: Yaskawa invests
Japanese robotics giant Yaskawa makes a $10M strategic
investment in ReWalk at a 20% premium to the valuation
at which OurCrowd investors came in.
The investment effectively increases Argo’s market value
from $23M pre money to $52M.
June 2014: FDA Approval; Follow-on Round
ReWalk is granted FDA clearance for its at-home-use
product, making it the first and only exoskeleton to be
cleared for sale in this important market.
OurCrowd participates in a Series E round, with members
investing $2.59M in ReWalk.
15. July 2014: ReWalk files for IPO
ReWalk files for an initial public offering on
NASDAQ. Investment banks Jefferies and
Barclays to be book runners.
September 2014: RWLK lists
ReWalk lists publicly on NASDAQ under the
ticker RWLK. Offering 3.45M shares at a price
of $12, the company raised a total of $41M.
The future
March 2015: Liquidity for early investors
ReWalk’s 180 day lockup period is scheduled to
end in March 2015, at which point original
investors are able to sell their stakes in the
company in the public markets.
16. ReWalk’s Story: What it means for OurCrowd members
! OurCrowd total investment into ReWalk: $3.39M
» D Shares: 11988 shares
» E Shares (including warrants): ~15250 shares
! Convert to ordinary shares – 18 to 1 split at IPO
! Resulting OurCrowd ownership of ReWalk (RWLK)
» After IPO – 617,664 shares (5.4% ownership)
17. Next steps for OurCrowd & VCs
! We’ll distribute shares after the lockup, deducting carried
interest in the form of shares
! Now we’ll know nothing more than any other investors,
including yourselves
! All VCs step back at this point, except those holding a
board seat
! What to expect: News will impact price of stock in real
time. Direct correlation of business performance to stock
price
! What to expect: Regular company reporting directly to the
public
18. ReWalk in context
ReWalk’s decision to go public
! Which exchange?
! Why now?
! What’s next?
19. ReWalk in context
M&A vs IPO in Israel
! Israeli companies are well
known for being acquired
early and frequently
! Hundreds of multinationals
are established in Israel and
are building R&D centers
around acquisitions
! IPOs normally single digit
contributions to Israel’s 70, 80,
90, or 100 annual exits
Some of the acquirers from ‘05-’10
20. ReWalk in context
New breed of Israeli companies
forming
! M&A size is increasing
! Israeli serial entrepreneurs able
to attract later stage financing
from big international sources
more easily
“Recently, we are seeing Israeli companies
grow, and become world leaders in their
areas. We are seeing companies with
revenues of over $100 million. We did not
see these in the past. They were being sold
much earlier, often pre-revenue.”
Rubi Suliman
PwC High-Tech Partner
32# 35#
51#
81#
111#
83#
120#
100#
80#
60#
40#
20#
0#
2008# 2009# 2010# 2011# 2012# 2013#
Millions of $
Rising average M&A prices ($M)
21. Listings on NYSE + NASDAQ
ReWalk in context
USA:%
7600%
Canada%
220%
Israel:%134%
China:%
192%
Switzerland,#14#
UK,#11#
Germany,#10#
India,#14#
France,#8#
New breed of Israeli
companies forming
! IPOs are increasing
» Borderfree
» Outbrain
» Matomy
» Mobileye
“2013’s four Israeli NASDAQ IPOs have had on
average an 85 percent increase since
offering. So the Israeli companies do well on
NASDAQ”
- Meyer Frucher, Chair of NASDAQ
22. IPOs: How they work and what
they mean for your portfolio
An OurCrowd Investor
Education Webinar