IPOs: How they work and what they mean for your portfolio An OurCrowd Investor Education Webinar

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

How IPOs work Public vs Private Effects on early investors Process

Going Public ! Portion of your company

traded on public exchange !  IPO: first time shares are

offered publicly ! Positives:

»  Liquidity »  Credibility

Public vs Private

“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

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 vs Private

“[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

Private vs Public

~$35B revenue

Acquired by founder for $25B

Acquired by BRK.A for $23B

~$140B revenue

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

What does IPO mean for earlier investors?

Liquidity

Valuation boost

Potential dilution

Investment

Equal information

Many private investors exit

Board/investor hand-off

Management

The IPO Process: An Overview

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

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.

The IPO Process: An Overview

Opening price is set Public trading begins

The ReWalk Example Timeline of a successful venture investment ReWalk’s decision to go public ReWalk’s IPO in context

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

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.

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

futu

re 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.

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)

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

ReWalk’s decision to go public

! Which exchange? ! Why now? ! What’s next?

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

ReWalk in context Some of the acquirers from ‘05-’10

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

ReWalk in context

32# 35#

51#

81#

111#

83#

0#

20#

40#

60#

80#

100#

120#

2008# 2009# 2010# 2011# 2012# 2013#

Mill

ions

of $

Rising average M&A prices ($M)

Listings on NYSE + NASDAQ

ReWalk in context

USA:%7600%

Israel:%134%

China:%192%

Canada%220%

Germany,#10#

Switzerland,#14#

UK,#11#

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

IPOs: How they work and what they mean for your portfolio An OurCrowd Investor Education Webinar