April 20, 2023: Expert shares today’s top VC trends for family offices
PEER-TO-PEER INSIGHTS: Jon Medved, founder of OurCrowd
Jon Medved is a pioneer of Israel’s venture capital industry and founder of OurCrowd, an online global venture investment platform for family offices, individual investors and institutions. Medved, a native of California, moved to Israel in his 20s. There he successfully built and exited several startups before establishing OurCrowd to democratize investment in early-stage, emerging technology companies. Crain Currency talks with Medved about the latest VC trends from family offices.
How does OurCrowd differentiate itself from other platforms?
We have skin in every investment we make – more than $100 million of our money is invested in the $2.2 billion of committed funds. We choose our investments rather than taking a sliding fee from companies. Our business model is to take a management fee and carried interest from our investors. We put our investment on the same terms as those who join us, and we then bring it to the crowd, who are accredited investors and family offices.
What’s OurCrowd investing in now?
We are agnostic, in that we invest in everything from cybersecurity to food tech to space to quantum, across sectors, stages and geographies. We have licenses all over the world and invest globally.
We recently invested in Quidnet Energy, which uses oil and gas technology to pump water underground, collecting renewable energy during the day and using the pressure of the Earth to squeeze it back up to utilize it at night. They’ve already got their first $30 million contract and a $10 million contract with the Department of Energy.
We were introduced to the deal by Breakthrough Energy Ventures, which was started by some of the wealthiest people in the world – including Bill Gates and Jeff Bezos, who felt that they needed to create a venture fund focused on true breakthroughs in energy. They’re the best energy investor in the world, in my opinion. We’ve done five deals with them with investing in green hydrogen, green steel, smart energy utilization and energy storage.
We’re also doing a deal with a company called Zipline, which uses high-performance drones to deliver blood in rural Africa. Co-investors are Sequoia, Goldman Sachs, Andreessen Horowitz and Fidelity. It’s like a who’s who of people you’d like to invest with.
How do you compete with the demand for direct investing?
It’s wonderful if you live in Silicon Valley. It’s pretty good if you live in Austin or Boston. You can find deal flow in London and certainly Tel Aviv. But the rest of the world – there are rich people everywhere looking for deal flow. Everybody wants to be exposed to innovation, so it’s very competitive to source deal flow directly. All the deals on our platform are vetted and run through our investment committee. We participate in every deal.
Even the smartest family offices, the ones who have a big portfolio already, are surprised we don’t charge an upfront fee for deal flow. Last year, we did over 130 deals, approximately two to three deals a week – which includes new deals and follow-ons, which are investments in our existing portfolio.
What’s the minimum investment look like for your clients?
Minimum investment is $10,000 per company or $50,000 per fund. We lead about half the transactions, and the other half, we work with over 1,500 venture funds who we sit on boards with, so it’s a huge community. We have an annual summit with thousands of delegates from more than 80 countries. Half of our investors are in North America, half are based throughout the rest of the world, and less than 5% are in Israel. Our clients include family offices, individual investors and institutions.
Interview conducted by Amy Guttman
Report: Global art market demonstrates resilience
This newsletter will feature guest commentary, white papers and reports from prominent members of the family-office community. This week, we are including an excerpt from the Art Basel and UBS Global Art Market Report 2023. The report, published annually, discusses prominent trends in the art market, including how it has fared in the face of economic uncertainty and what opportunities lie ahead for the coming year. The full report is available for free download here.
“The global art market continued to grow in 2022, exceeding pre-pandemic levels. This was largely catalyzed by the return of the event-driven cycle of art fairs, gallery openings and auctions, as well as gains at the highest end of the value spectrum,” says Noah Horowitz, CEO, Art Basel.
Global art sales increased 3% year on year to an estimated $67.8 billion, bringing the market above its pre-pandemic level in 2019. However, performance varied by sector, region and price segments. The main driver of growth in values across all sectors in 2022 continued to be the high end of the market.
Christl Novakovic, CEO, UBS Europe SE, and Head of Wealth Management Europe, comments: “The year 2022 saw the art market hold onto its post-pandemic rebound and strengthen further despite severe economic uncertainty and the return of war to Europe. Financial markets slumped as central banks battled inflation and as television sets flickered with scenes of willful destruction we thought, perhaps foolishly, had been consigned to the past. Collectors, however, remained committed to the market and reengaged with live events while exhibitions, auctions and fairs returned to fuller schedules. This cautious growth in the face of deep uncertainty is testimony to the strength of the post-pandemic art market and reason to believe in its resilience.”
THE U.S. MARKET
The U.S. market retained its leading position in the global art market, with its share of sales by value increasing from 43% to 45% year on year. The UK market moved back into second place with 18% of sales, followed by the Chinese market, whose share decreased from 20% to 17%. The U.S. has seen one of the most robust recoveries from the pandemic of all the major art markets. ...
Jason Chandler, Head of WM Americas at UBS Global Wealth Management, explains: “The U.S. market roared back to life, again securing its premier position in the global ranks. This was bolstered by growth in dealer sales and historic auction events. We continue to see strong interest in art from our clients who share our belief that art inspires, sparks conversations and provides new perspectives.”
After a significant 25% decline in sales in 2020 during the pandemic, the U.S. has seen one of the most robust recoveries of all the major markets. Sales bounced back from the pandemic in 2021, increasing by just over one-third in value to $28.0 billion. Growth continued in 2022 with a further increase of 8% year on year to $30.2 billion, its highest level to date. This was driven by a major uplift at the high end of the auction sector, including Christie’s sale of Paul Allen’s remarkable collection in New York [which] realized more than $1.6 billion in November, along with more moderate but positive growth in dealer sales. The U.S. was also still the largest individual market for fairs, accounting for 24% of the total number of events that took place around the world in 2022.
Looking ahead to 2023, 77% of high-net-worth collectors surveyed by Art Economics and UBS in 2022 are positive about the outlook for the global art market, and a majority (55%) plans to buy art in 2023. In certain markets, such as the important U.S. market, their share is as high as 65%. 45% of dealers expect an improvement in sales, with 10% predicting a significant improvement. In the auction sector, surveys of the midtier businesses show that 48% forecast an improvement in their sales, and 60% expect their online sales to increase.
Horowitz comments: “While signals of macroeconomic volatility are a dominant talking point as we head into 2023, the data shows us a resilient art market bolstered by deep-pocketed collectors, particularly at the high end.”