Securities Authority issued emphasis to the public before deciding to invest in public R&D partnerships

The Securities Authority issued emphasis to the public before deciding to invest in public R&D partnerships on the stock exchange.
In July 2020, the first R&D partnership, Millennium Food-Tech, was issued almost a year after the Securities Authority approved the use of the investment tool, which is intended to encourage the entry of technology companies into the stock market. R&D partnerships are actually intended to serve as a kind of public risk To be exposed to investing in start-ups.
Since the IPO of Millennium Food-Tech, ten additional R&D partnerships have been issued and another five are in the process of being issued.
The emphases are interpreted against the background of the Authority's intention to change the issuance conditions of the R&D partnerships, including: raising the minimum fundraising amount to NIS 50 million, extending the blocking period of the participation units held by the general partner, and raising the minimum investment in target companies.
The Authority states that it presents the emphases after a period in which it followed developments in the R&D partnerships. Even before the emphases, the Authority notes that the R&D Partnership, as it is called, invests in companies that are in the research and development phase of the product or service. Therefore, the field is characterized by high risk and is intended for investors with the ability to absorb heavy losses, sometimes a complete loss of all investment funds.
The first emphasis for investors is that it is a high-risk investment, because within the framework of the partnership's incorporation structure, the entrepreneurs control and direct the partnership's activities, such as investment decisions in start-ups and realization, without holding a significant share of capital and economic risk. According to the stock exchange's regulations, the general partner who is in fact the entrepreneur and the management company of the partnership, must participate in 15% -20% of the raising amount of the partnership, up to NIS 100 million. And must participate at a rate of 10% if the amount raised is more than NIS 100 million. Thus in the event of a partnership failure, the public that has invested most of the capital bears most of the risk.
Another factor that the authority mentions is the experience of the partnership's managers and entrepreneurs, when, according to it, a considerable part of the success depends on the identity of the managers. Some of the partnerships boasted senior and well-known executives from the capital market, whose experience in investing in start-ups is limited.