Seed Capital From Angel Investors: David Rose, Founder and CEO of Gust (Part 3)

Sramana Mitra: What is the business model of Gust? You said you just launched the business. What was the business model of the seven, eight years of market development that you did, and what is going to be now the business model of Gust?

David Rose: The business model of AngelSoft was purely leading up to Gust. Gust has been a 15-year plan from the beginning. It’s been an insane entrepreneurial venture that nobody in his right mind would have financed or believed in. But that’s why we have entrepreneurs and crazy angel investors.

SM: Did you finance it yourself?

DR: Yes.

SM: It’s the only way you can stake long-term projects.

DR: That’s true. If you think about the challenge we were facing, which was to create a global infrastructure for a market that was just beginning. You could project it would exist, but when we started, it didn’t exist. There were no angel groups in Turkey seven years ago. This is all relatively recent stuff. But we projected it would come. It’s a classic chicken-and-egg problem, and we knew that this was not a symmetrical chicken and egg. There are lots of entrepreneurs. If you look in the microfinance world, there are entrepreneurs all over the place. But the chickens here, being the investors, were very hard to find. So, for this to work, we had to work with the investors. That’s why we spent all the time we did getting the investors on the platform.

Now we are the official platform for most of the organized investment networks in the world and are now also opening up to individual investors. AngelSoft, as a market development thing, had no standalone business model. It was always leading up to Gust. Gust’s business model is also a long-term one, which is similar to LinkedIn. When LinkedIn was started, it was free to post your profile on LinkedIn. Seven years later, it’s still free to post your profile on LinkedIn, but with 100 million LinkedIn profiles, they can now create additional value, not just by selling you things, but by the value of the platform itself. For example, whether it’s In-mail or passive recruiting or job boards or company metric analysis, they have many revenue streams that have all been enabled by having the network.

Similarly, with Gust, once you have hundreds of thousands of participants in the ecosystem on the platform all working together, there are things that you can create, value that you can add that requires that. For example, there will be the ability for investors to add on a suite of portfolio management tools to aggregate information from all of the companies that they have on the platform, for reporting and other purposes. There will be value-added platforms for entrepreneurs who want to expand the websites they create with Gust, which now has their full video pitches with a multi-screen, really cool platform to create them. It’s got their executive summaries and other materials. They will be able to have premium features that will add in dozens of other things they can include in their Gust websites. All of those will automatically slide into the investors’ side and be right at the investors’ fingertips, which you couldn’t do unless you had both sides. There will be the ability to create all kinds of other platforms, whether advisory platforms or transactional things, deal-closing mechanisms, things for online electronic signatures and investor accreditation, and a host of other things. There are probably 30 or 40 different businesses, all of which require this global platform. That’s why it’s a 15-year plan. That’s why the first decade has been getting everybody on the platform.

Sramana: Today, you said 125,000 entrepreneurs have created profiles. Have they had to pay to be on the Gust platform?

David: No. It’s all free. Anybody can go right now to Gust.com and create her own website that she controls access to and upload anything. It’s similar in some ways to About.me. [Entrepreneurs] can upload their own backgrounds and put their own text and logos. They can share this with any investor they want, and there’s no cost. On the investor side, there’s no charge for nonprofit organizations that use it for business plan competitions and the like. We do charge venture capital firms for using it for deal flow management, unless they happen to belong to one of our strategic partner organizations such as the National Association of Seed and Venture Funds or the Community Development Venture Capital Alliance, in which case, it’s free to them as well.

This segment is part 3 in the series : Seed Capital From Angel Investors: David Rose, Founder and CEO of Gust
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