Seed Capital From Angel Investors: David Rose, Founder and CEO of Gust (Part 2)

David Rose: Based on that, we went out and began to approach business angel groups and networks and their parent associations and organizations. We created for them an entire infrastructure platform to handle the management of all their incoming deal flow, members, and membership of their investment management under the name AngelSoft. By working laboriously for more than seven years with all of these angel networks and groups around the world – and their parent organizations – we managed to get enough investors actively involved on the platform that it made sense to then start the company. The company, Gust, which we launched on September 13, is the new incarnation of AngelSoft. AngelSoft was a seven-and-a-half-year market development exercise that was necessary to get investors involved prior to the launch of Gust.

What we’ve done is to take the platform that underlies all these investment organizations and all these thousands of angel investors and opened it up to entrepreneurs. Gust gives entrepreneurs the ability to create their own investor relations website with everything that investors want to see to make an investment in a company. The entrepreneur controls access to it and the look and feel and the content, obviously. They can invite any investors or angels whom they want to deal with. They can give [the angels] access to their websites where the investors can see the materials.

But the great thing about it, and the real power of Gust, comes because we also do the other side, all this deal flow management for all these investment groups. When an entrepreneur shares his or her Gust website with an institutional investor, like an angel group, instead of the group having to look at the website, that website slides seamlessly into the existing platform that the venture fund or angel group is already using. The investors see all this information, and they can collaborate on their side, around all the information provided by the [entrepreneur]. So, it serves as a two-way channel of communication with getting all the information done correctly at one time by whomever it is most important to. The fact that we had been laying the ground work for this for seven and a half years meant that when we launched Gust, we had some very interesting adoption.

Gust launched with more than 125,000 companies having put their information on the platform. More than 35,000 legitimate, accredited angel investors in 65 countries are using it to manage their deal flow. More than 600 business angel groups and networks around the world use it as their home management and infrastructure platform, and more than 150 venture capital funds. It is the official platform of the national and international business angel investment federations in the United States, Canada, Australia, New Zealand, Ireland, France, Turkey, and Portugal.

Sramana Mitra: Excellent. What trends do you see? You’ve already created a platform with 35,000 angels and 125,000 entrepreneurs. What trends do you see in this pool, as in what regions are getting their acts together where there is a critical mass of both entrepreneurs and investors, for instance? What other information can you give me based on your extensive reach into this market?

DR: Sure. What’s happening now is this is all happening very rapidly. This is where all of the exponential technological change in both underlying technology and communication is having a major effect. Twenty years ago, there was virtually no angel investing anywhere outside of some parts of the U.S., Silicon Valley, New York, and a couple other places. Now, what you’re seeing is an explosion of angels. For example, in France, there are tax benefits that are specifically designed to spur angel investments. There are dozens and dozens of angel groups all over France that are actively investing in startups. In India, you have an active angel world. There are groups in Mumbai and Delhi and all around the country that are providing real mentorship as well as capital to a burgeoning startup community. They are in many cities in India. You have places like Turkey, which hosted the EBAN, the European Business Angel Network, congress last year. One wouldn’t think of Turkey a typical hotbed of angel investing, but it’s certainly started there.

The U.S. State Department under President Obama has created the Global Entrepreneurship Program, which is working in the Middle East and a lot of other places, to help spur entrepreneurial economies and angel groups and so on. We’re seeing stuff happen there, nascent things, but nevertheless active in places like Jordan and Egypt and so on. Then, of course, you have the traditional countries that have active startup populations, which are now hotbeds of angel work, for example, Israel, Australia, and New Zealand, where I’ll be going to give an address at their annual summit. These are entrepreneurial countries that have angel associations and where dollars are meeting technology.

This segment is part 2 in the series : Seed Capital From Angel Investors: David Rose, Founder and CEO of Gust
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