OrCam stymied by investor dispute with Shashua

A dangerous dispute between institutional investors and the founders of the Israeli company OrcamWhich develops visual impairment devices and hearing, delay the company's recovery plan, which includes the company's spinning and money raising. Consequently, Orcam, founded by the former Mobileye founders Professor Aminon Shashua and Zif Affaram, stuck in a business crisis.

About a year ago, Shashua and Afiram, along with BRM and private investors, began a $ 12.5 million financing round for Orcam, of which about $ 7 million came from the money of Chashua and a few millions of others from Aviram. The intention was to implement a number of moves that would lead to the company's recovery, due to two strikes that suffered: competition from artificial intelligence companies, such as Openai and Apple, which launched a product of hearing competing with the Orcam hearing product; And the war in Gaza, which led charitable institutions to stop buying their smart glasses, because many agents come from Arab countries. The company's revenues decreased from 45 to $ 50 million in 2023 to $ 16 million in 2024, especially from smart reading glasses in Orcam.

The planned financing round aims to finance a process to rehabilitate the company, which includes its division into two companies: one for smart glasses, which are very profitable and responsible for the company's revenues, and the other for smart hearing tools, which allows the obstruction of hearing to focus their attention on a specific speaker and liquidate all other noise. As part of the rehabilitation plan, the founders planned to sell the vision products section, which is profitable and profitable, but faces very strong competition from the products based on language models, such as those in Openai and Google. The collected money will be used to finance the development of innovative hearing devices.

However, many Orcam investors including Leumi Partners, Harel, Meitav and Clal, as major investors, must agree to this step and inject capital. These founding investors have agreed to divide and the financing round that Choshua started and its partners, but they refuse to participate in it, which reduces the company's capital. In addition, in order to rehabilitate ORCAM, which is witnessing talented staff leave, between 12 and 15 million dollars must be collected. However, the financing round does not move forward, because Orcam has not provided a viable recovery plan, but only a plan to obtain a loan of $ 2 million, which would keep the company on its feet for a month or two.

In order to agree to a new plan, institutional investors have demands: full protection against mitigating their shares. This is the term unusual investment currently unacceptable in technology investments, because it dictates a significant dilution of shares by entrepreneurs and other investors if the company's value decreases. However, the presence of this protection for institutional investors makes it difficult for the company's capital structure and its ability to increase additional capital, because it dictates negotiations with institutional investors to restart the capital structure – a rare step in companies with a recovery plan, and also constitutes recognition by institutional investors in making a decision in the fair value of reservation. According to estimates, the company's evaluation decreased by more than 90 %, with an estimated value of about 150 million dollars, a decrease of $ 1.5 billion in 2021.

The crisis in Orcam leaves one product and less than 100 employees

Orcam has grown as a company that relies on the advantages of the Amnon Shashua Group – international experience in artificial intelligence technologies, and many years of knowledge in developing chips and devices systems. The company was established to improve the quality of life with visual and hearing disabilities, through smart glasses and headphones that would make large parts of the real world easier. Glasses enable street marks for people at outside and books at home. It is difficult to hear, ORCAM aims to filter noise and focus on hearing on the speakers chosen by the user.

However, the conditions of the market and the competition from the Orcam intelligence left with less than 100 employees and only one of the three of the three that I had previously developed. The company even imagined the public subscription about a year ago, and implemented a regulatory chapter between the products, in order to remain profitable in some of them. Orcam realized that language models that provide high -quality solutions to recognize images and texts are an immediate danger to the company's business model.

The philosophy of Shashua and Afiram attracted “equality” in the distribution of joint shares to investors, based on the concept of zero class differences between investors in various stages, many investors, including institutional investors, with the expectations of needs from “upcoming mobile”. Based on this approach, the founding investors have reached an irregular investment strategy for direct investment in the company, which is not typical for them. None of them expected the value to decrease by 90 %, and thus the protection of mitigation became illogical. This created a conflict between investors, preventing the next financing round, and to harm the ability of Orcam to recover.

It was published by Globes, Israel Business News – En.globes.co.il – on March 13, 2025.

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