ISOB is a unique Internet based platform that connects promising Israeli startups and high growth companies with investors, mentors and business partners for the purpose of raising capital, enhancing business development, and facilitating peer-to-peer transactions to buy / sell stake in a startup.
ISOB - the Israeli Startup Opportunity Board – is a pioneering online platform which enables the ISOB underwriting* of private placement for startups.
ISOB enables any private company in Israel to raise capital from potential Accredited Investors registered on the site (ISOB Investors Club) in a comprehensive, efficient, fast and cost-effective process.
The ISOB underwriting* enables startups accomplish the closing of their capital raising, the "last mile to funding"
The capital raising process :
- Any company wishing to raise capital must state the predetermined minimum amount it intends to raise (the "Fundraising Target") and the minimum amount to be raised from the investors, lower than the "Fundraising Target" which when reached will activate the ISOB underwriting commitment (the "ISOB underwriting threshold").
- IF the total capital raising commitments are lower than the "Fundraising Target", then the startup’s capital raising will be canceled and any amount already paid will be returned to the investors.
- If the total capital raising commitments from investors are higher than the ISOB underwriting threshold, then the ISOB underwriting commitment will be activated and ISOB will invest the difference between the Fundraising Target and the total fundraising commitments from the investors and the startup’s capital raising will be declared completed ("ISOB underwriting").
Application to raise capital
- Providing information and business plan.
| Step 2
- Evaluation of the business opportunity, supplementing information, meeting with entrepreneurs and management
- Agreement on the terms of engagement with ISOB, reaching understandings regarding the capital raising terms, determining the services required and entering into agreement with external experts.
| Step 3
- Preparing presentations and Enterprise Business Profile Documents on view for all potential investors
(does not constitute an offer).
- Preparing Enterprise Capital Raising Documents (investment documents) for offerees (click for who can be an Investor).
| Step 4
- Presentation to the ISOB Investment Committee.
- Subject to the approval of the ISOB Investment Committee, the investment opportunity (the Enterprise Business Profile Documents) will be uploaded to the ISOB platform.
| Step 5
- Formation of the potential investors group (the Offerees)
| Step 6
- Review and due diligence by the offerees and questions and answers.
- Negotiations and modifications of the investment documents and determining the group of investors in a pre-determined process.
| Step 7
- Completion of the investment process, exercising the underwriting commitment - if necessary.
- Appoint a mentor and a trustee.
- Transfer of funds less costs and transfer of ownership certificates
| Step 8
- Assistance and guidance by a mentor
- Appointment of the Investors' representative.
- Periodic reports on business developments, milestones and financials all subject and in accordance with the terms of the Shareholders Rights Agreement.
Step 1 Application to raise capital
- Enterprises may register to the site in order to raise capital. Full details should be provided on the investment opportunity, company's ownership , its capital structure, previous capital raising activity, the team, business plan and the "Fundraising Target" as well as any additional information required. The cost for filling the application for ISOB's initial review is NIS 500 excl. VAT which is non refundable and payable through the site by credit card.
Step 2 Initial assessment and screening
- ISOB will review the registration application, ask for additional information, meet with the entrepreneurs and management to make a preliminary decision whether to continue the process and finally agree on the Term Sheet for the investment opportunity.
- The startup will appoint experts and external consultants to assist in preparing and arranging the relevant material and information for the investor's “due diligence” and in the preparation of the required presentations and documents. ISOB's business model is aimed at completing the process quickly cost-effectively. The review by external consultants does not constitute due diligence or an official audit.
Step 3 Preparing presentations and documents.
- The entrepreneurs are asked to supplement information to be reviewed by the experts and/or consultants. With the help of the consultants the entrepreneurs will prepare, the following mandatory information to be submitted to the ISOB site:
(1) The "Enterprise Business Profile Documents
" - intended for all investors registered on the ISOB platform.This does not constitute an "offer to the public” and / or “offer to sale to the public" as defined in the Securities Law (1968)".
(2) The "Enterprise Capital Raising Documents
" - constitute an offer to purchase securities for offerees only. Capital
will be determined by the type of enterprise and funding and may include among others - the framework of raising capital by a private placement (presentations, company profile and business, the business opportunity, the "Fundraising Target", the “ISOB underwriting threshold", the capital raising structure, use of proceeds and drafts of the investment agreements.
Step 4 Presentation to ISOB Investment Committee and Committee's approval to upload to the ISOB platform
- The startup will be asked to upload information to the ISOB platform which will be available to all registered users of the site and will consist of "Enterprise Business Profile Documents" This information does not constitute and can not be regarded as an "offer to the public” and / or "offer or sale to the public" as defined in the Securities Law (1968).
Step 5 Application to examine a particular investment opportunity by registered investors and forming a group of offerees
- Investing in companies and opportunities is limited to Accredited Investors and possible only after receiving full details on the investment opportunity, which is provided and included in the "Enterprise Capital Raising Documents" and in accordance with the predetermined process. Only verified Accredited Investors can invest in the capital raising.
- Registered investors interested in a particular investment opportunity must submit an application through ISOB to the startup, and request the "Enterprise Capital Raising Documents".
Step 6 Independent Review and evaluation of the investment opportunity and the company by the offerees
- Offerees are allowed and encouraged to conduct their own independent due diligence of the investment opportunity in order to whether to invest as well as the terms and conditions in the investment agreement drafts.
Step 7 Enter into investment agreement and proceed to raise capital in a private placement.
- Participating investors in the capital raising process are chosen from the offerees in a predetermined procedure. The offerees and other relevant parties are notified of the decision pursuant to the provisions and requirements of the Securities Law (1968) and / or other legal provisions and ISOB procedures.
- The legal structure and organization of the investors is determined, and the investors appoint the " investor's representative" to represent the investors in the investment opportunity
- The startup’s mentor is chosen and the investment agreements between the parties are finalized. Each investor must transfer the full amount of his or her committed investment (minimum USD 30K) to a special escrow account at least 96 hours before the date specified for the capital raising or as determined in the Enterprise Business Profile Documents.
- Investors' funds are deposited in a escrow account until the closing. Upon announcing the closing, the startup will be entitled to the amount of capital raised minus costs and consultants' fees in exchange for the transfer of the interests/ shares issued to the investors. If the capital raising was not completed, closing will not occur and the amounts deposited by each investor in the trust account will be returned to the bank account provided by the offerees upon registration as investors on the ISOB's site. Amounts deposited in the escrow account do not bear interest.
Step 8 Ongoing monitoring of the investment, supported by the mentor, transparency and reporting.
- Upon finalizing the capital raising process, the mentor will support and guide the startup and its management in order to achieve the milestones presented in the business plan.
- The investors' representative will oversee the corporate governance of the enterprise and its related party transaction policy, all in accordance with the Investors' Rights Agreement.
- Subject to the Investor's Rights Agreement, investors may have the right to appoint a representative as an observer or a member of the board of directors of the startup, and will have the right to receive the pre-agreed periodic reports.