BY: Yehuda Gelbord
In Israel and elsewhere, a niche investment area has emerged in the realm of conscience-based investments: investments with an economic and financial logic that operate according to religious principles. In the Orthodox Jewish world, this means operating in strict compliance with halachic requirements.
Eliezer Gross, CEO and founder of The Besadno Group, and the new InvestiNation online VC platform ,an Orthodox Jew himself, attaches great importance to investment management according to halachic rules and admits that it is no trivial task.
Besadno, founded is 2011, is an Israeli-American investment group focused on investments in innovative ventures, commercial companies, and real estate in Israel and in the US. It is the first investment group that makes it possible for people around the globe to invest in alternative investments, in an ethical, kosher and professional way. Some of these alternative investments include technology-based start-ups and special real estate projects.
Between 2011 and 2019, 1,210 Israeli companies made “exits”, netting their investors a total of 112 billion dollars. The Besadno Group aims to allow its investors to tap into the vast potential of the Israeli start up ecosystem, and likewise benefit from the potential successes of these innovative companies. Recently, the group launched the first of it’s kind online investment platform, InvestiNation. As an investor looking for their next lucrative investment, InvestiNation allows one to gain early access to promising Israeli startups in the most exciting technological fields.
So how can investment and halacha be combined? Besadno starts by applying investment management philosophy – combining an evaluation of the quality of the company’s management; technical and market analysis; and a review of the company’s business plan and intellectual property. It then follows such business analysis with further assessments designed to ensure that the investment complies with halacha. “Trying to explain the range of laws covering investment according to halacha is not a simple task,” says Gross. Because of this, Besadno regularly works with a team of Poskim to ensure these checks are made and maintained.
Gross has a long and detailed list of stringent rules that govern Besadno’s choice of investments.
“There are two main known Halachic issues pertaining to investments. The first is “Ribis” – the prohibition on charging and receiving interest. This issue needs to be addressed whenever there are loans or transactions paid in installments. There are entire sefarim written regarding this issue and there are Poskim who specialize in this field”, explains Gross. To solve this issue, Besadno makes sure that its investment agreements do not conflict with any of the applicable Ribis halachos. In addition, the company uses a strong Heter Iska, to ensure all angles are covered. Another major Halachic concern is the observance of Shabbos. “We check whether the company closes on the Shabbos, sells its Hametz (leavened bread) on Passover and so on. When you invest in a company that works on Shabbos, it doesn’t matter whether you own a one percent share, ten percent share or half a percent share, you are, in actual fact, partnering in their Chilul Shabbos.”
It is for this reason that the Besadno Investment Group has both an official Kashrus certification from the Badatz of Yerushalayim, and, a consulting Rabbi on its advisory board with whom it confers whenever a Halachic question arises. Furthermore, Besadno requires all companies in its portfolio and on the InvestiNation platform to sign an agreement that there will be no work performed by Jews on Shabbos. In the event that the investment company has branches located outside of Israel, any work on Shabbos is only allowed to be performed by non-Jews. There are other Halachic concerns in the food tech industry, including Kashrus of raw materials and “Tzar Baalei Chaim” – the prohibition of harming animals.
“Our Torah is a Toras Chaim”, Gross explains. “We are surrounded by mitzvos that are both active and those that are mitzvos by prohibition. We are the only investment company in the US market that provides our investors with a guarantee that our due diligence includes a Halachic stamp of approval as well.” The Halachic requirements are not limited to those mentioned above. The company goes as far as to specify in each investment contract they sign that if, chas veshalom, the two parties end up in a disagreement, it will be resolved in the Beis Din of Rav Asher Weiss.
But the work does not end there. In the era of globalization, with occasional investments in non-Israeli ventures, the challenge is even greater. Including foreign companies in a fund that operates according to halacha is no easy task. “We forfeited an investment opportunity in a fabulous Israeli company that was set to launch an IPO on the Australian stock market. The problem was that the Australian stock exchange required the company to agree to be available to fix their web service on a Saturday. As this was an Israeli company launching, we left the deal there and then.”
With a network of over 10,000 colleagues, partners, and investors, alongside dozens of investments and an impressive number of exits, the Besadno group has established itself as a true success story. “We are able assist startups with a go-to-market strategy and take an active role in their growth and success”, Gross explained.
Dr. Ilan Cohn, among Israel’s leading IP practitioners and a large-scale investor in Besadno, identified three major factors that sets the company aside from other investment houses. “In addition to a highly professional business-related due diligence, which is second to no one in quality”, Cohn explains, “Besadno employs ethical standards unparalleled in the venture investment world. These include ethics toward the entrepreneurs, treating them as true partners rather than bulldozing them as many others notoriously do. Another important ethical rule is the way that the company interacts with its investors. The high professional and ethical standards by which Besadno operates, are facilitated, among others, by a unique team spirit in the organization. These were determining factors that made me decide to partner with Besadno”.
Earlier this month Besadno launched the first online Kosher investment platform for investors in English. The platform allows access to some of the best innovation companies Israel has to offer for. Leveraging Besadno’s expertise and networking, the new “InvestiNation” platform, utilizes several tools to assist its ventures in reaching their full potential. These include, a dedicated US-based go-to-market team and the soon-to-be-launched Leaders Program that connects ventures with local professionals in a communities across the US. With the help of a dedicated team of experts from a variety of fields, and in collaboration with investment bodies and banks, the group locates high-potential investment opportunities, partners with them, and works towards a common goal of achieving significant financial success.
“For the first time, InvestiNation provides the Orthodox Jewish community with the opportunity to be a part of the next Israeli innovation success story, and all with a conscience-free approach in terms of Kashrus,” boasts InvestiNation creator, Oded Eliashiv.
“Not only does Besadno stand for b’siyata dishmaya, but we feel it in our day to day activities and we see the bracha that we have in our business for the benefit of our investor, our portfolio companies and ourselves,” adds Eliezer Gross.