The high-tech boom and the amount of money flowing to shareholders has encouraged many private investors to seek ways to jump on the bandwagon. Today, PrivatEquity.biz, announced that, from this week, its Internet trading platform will be open for business, allowing current and former employees in companies to offer the private securities they own to investors. The platform is for ordinary people, who are not classified as parties at interest or angel investors, to sell their securities.
PrivatEquity consists of three trading arenas: in addition to the securities arena for employees, PrivatEquity.biz's site offers two more trading platforms: The Growth Companies Private Issuing Arena and the Angel Investors Arena. Its plans to expand its activity to other countries in Europe's and Asia's high-tech centers to create an international cooperation and investment opportunities for investors worldwide.
Although platforms have been available for years for the trading in options and shares in private companies, the ability of ordinary private investors to join this closed club is new. Legislation allowing these investments, with a threshold investment of NIS 10,000, was included in the recommendations of the Committee for the Promotion of Investment in Public R&D Companies, which were submitted to the Tel Aviv Stock Exchange (TASE) and the Israel Securities Authority six weeks ago. The idea is use the crowdfunding model for raising money by start-ups.
The problem with the proposed platform is that the recommendations have not yet been enacted into law. This puts into question the platform's use at the moment. In any case, this is the first implementation of the committee's recommendations and an attempt to provide a trading arena for Israeli start-ups. PrivateEquity is not talking about crowdfunding, but a trading platform that is attached to the bill.
Under the recommendations in the report to the Securities Authority, not every company can raise capital through such a trading platform; only companies that have "obtained permission from the Office of the Chief Scientist or another agency as the Securities Authority sees fit." The process does not require companies to publish a prospectus, which puts the responsibility for the quality of the investment on the investor.
PrivatEquity enables companies to raise capital through an offering process only after obtaining initial financing from the Chief Scientist or in a first financing round. The platform also enables investment with advice from a professional investor who leads the investment process, which is also in line with the committee's recommendations. Investors can invest NIS 10,000-20,000.
PrivatEquity is helped by the committee's recommendation that "the capital can be raised via an Internet portal", which must disclose "the full terms of the investment and information that the issuing company is required to provide". However, the committee does not recommend "placing the portal under the direct supervision of the Securities Authority", which facilitates the website's activity.
PrivatEquity says on its website, "We are not a party in any transaction, and we do not examine the worthwhileness of a transaction." The investor should "meticulously examine the company which is offering securities for sale." As for the committee's recommendations, the company says, "As the regulations are enacted and become relevant to specific activity on the site, the site will be updated to comply with them."
PrivatEquity was founded by CEO Sigalit Cohen, Adv. Oren Harel, and legal adviser Ehud Weinberger.
"Millions of current and former employees of private high-tech companies all over the world hold the securities of private high-tech growth companies in various growth stages. At the same time, investors all over the world hold vast private capital and seek attractive investment offers in private high-tech companies. We allow current and former employees of high-tech companies to reach these sources of funding", says Cohen.
Published by Globes [online], Israel business news - www.globes-online.com - on March 10, 2014
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