Why do our investments need a Kosher stamp of approval?

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We sat down with Eliezer Gross from The Besadno Group who is a widely recognized investments expert and who explained just how crucial Kashrus and ethics is when managing an investment portfolio.

In Israel and around the globe, a unique investment niche has emerged that belongs to the realm of conscience-based investments: investments with an economic and financial logic which operate according to religious principles. In the Jewish Orthodox 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 is an Israeli-American investment group that specializes in investments in innovative ventures, commercial companies, and real estate in Israel and in the US and is the 1st kosher alternative investment group allowing people from around the globe to invest in the most ethical, kosher and professional way in alternative investments, such as technology-based start-ups and special real estate projects.

Eli Gross

Between 2011 and 2019, 1210 Israeli companies made so called “exits” with a total net of 112 billion dollars to investors. Besadno Group is no stranger to success tapping into  the vast potential in the Israeli start up ecosystem over the last decade enjoying from successes in these endeavors. 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 evaluation of the quality of the company’s management, technical and market analysis, 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, he has an entire team of Poskim that work tirelessly to ensure these checks are made. 

Gross has a long and detailed list of stringent rules that govern the company’s choice of investments.

 “There are two main Halachik issues pertaining to investments. The first is Ribis which is loan related to selling products in installments. In this case commercial dispensation is required which circumvents the prohibition against lending at interest. There are entire sefarim written regarding this issue and there are Poskim who specialize in this field”, explains Gross. Another Halachic parameter of course is the observance of Sabbath. He further noted that “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 an official Badatz of Yerushalayim stamp of Kashrut and have a Rabbi on their board who they confer with whenever a Halachik question arises. Furthermore, Besadno requires all companies in their portfolio and on the INvestiNation platform to sign an agreement that there will be no work performed on Shabbat and if it is performed in offshore branches, this work will be performed by non-Jews. There are other areas of Kashrut such as Kosher guidelines which pertain to the food tech industry in particular and “Tzar Baalei Chaim” which is the “isur”, namely 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 today that provides our investors with a guarantee that our due diligence includes the stringent Halachic stamp of approval as well.” The Halachik 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 disagreement, it will be resolved in the Beit Din of Rav Asher Weiss.

But the work doesn’t end there. In the era of globalization, with occasional investment 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 would not agree to have them sign off that they would be barred from any emergency activity or fixing 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 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 practioners and a partner in Besadno, identified three major factors that sets the company aside from the rest. “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.   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 enter into partnership with Besadno”. 

 

Earlier this month the Group launched the first online Kosher investment platform allowing access to the best innovation companies Israel has to offer for the US Orthodox investors. Leveraging the Besadno expertise and networking, “InvestiNation”, the new 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 Leaders Program that connects ventures with local professionals in a variety of communities across the US. With the help of a dedicated team of experts from an array of fields, and in collaboration with investment bodies, banks and brokers, 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 market with the opportunity to be a part of the next Israeli innovation success story”, boasts InvestiNation CEO Oded Eliashiv, “and all with a conscience free approach in terms of Kashrut”.

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