Less than a week ago we reported that the TASE (Tel Aviv Stock Exchange) is opening up a new funding channel for Israeli startups, as COVID panic causes investors to think three times before opening up their checkbooks. And now, the first startup makes good use of the innovative way of fundraising looking to bring in roughly $5.8 million as the stock market for startups takes flight.
The Israeli startup looking to score the big investment is Cannabotech, a developer of medical solutions based on botanical combinations of cannabis extracts and fungi, announced a direct share issuance to the public. The company aspires to raise $5.8 million and become a public non-traded startup company.
Elchanan Shaked, CEO of Cannabotech said: “By using the new platform, we are allowing the Israeli public to invest in Israel's startup scene in a completely transparent manner.” This new public funding channel model nets its first startup participant. Cannabotech aims to turn this fundraising opportunity into a full-blown listing of shares to trade on TASE, for now, the company claims that this opportunity is the best chance to get in on the ground floor investment-wise before the company goes public.
The public non-traded channel turns into a potential life-saver for startups that are facing the sometimes demoralizing challenge of raising capital during COVID. While not in traditional funding fashion, new times call for new measures, and Cannabotech is happy to take part “despite the uncertainty in the markets given the COVID-19 crisis, we are excited to announce our first public offering, which is carried out for the first time under a first-of-its-kind model in Israel,” Shaked noted.
The issuance, which is implemented according to a prospectus and in line with Israel's securities laws, will be performed digitally and directly to the public on the digital platform of Fundit, a Poalim and IBI company. In the issuance, Cannabotech will offer its shares at a little over $20 per share, seeking to raise $5.8 million. The company will award discounts to investments above $29,000, as advised in the company’s prospectus on MAGNA, the direct reporting system of the Israel Securities Authority.
Shaked continued to add: “This offering method is vastly different from the traditional model, which is reserved for an exclusive club of institutional investors and funds. Under the current model, Cannabotech becomes a public company, not yet traded on TASE. The complete company information is available to the public in the prospectus in compliance with Israel's securities law. We believe our move is opening a new route for companies to become public and that many companies will follow our steps.”
Cannabotech was founded in 2018 and focuses medical cannabinoid and mushroom based treatments for patients with cancer and chronic pain. The company has raised $2 million up-to-date and is based in Tel Aviv.