Seed Capital From Angel Investors: David Rose, Founder and CEO of Gust (Part 4)

Sramana Mitra: So, in general, the investors are paying; the entrepreneurs are getting it free.

David Rose: Right now, such as it is, yes. Although the large returns will come in the future from premium services that will be added in.

SM: You’re going to have premium services on both sides? Both the entrepreneurs and investors will have additional premium services?

DR: That’s correct.

SM: Got it. It’s interesting; I spoke with Naval Ravikant of AngelList, and they have come to the same conclusion in that they want the investors to pay, and they want the entrepreneurs to use it free.

DR: That’s the only way to do it.

SM: [Statistically], 99% of the entrepreneurs who go out to look for financing fail to get financing. The value that [One Million by One Million] provides is in educating the entrepreneurs [and helping them] figure out if they will ever get financed, whether their deals are at all fundable. If not, then how do they finance the company? [We teach them] bootstrapping techniques. Our project, One Million by One Million, is an education project. We charge the entrepreneurs, not investors.

DR: Right. Again, Gust is the infrastructure for funding. It’s an equity-based infrastructure, which is designed to serve as the glue tying together entrepreneurs and investors, ones who might invest and ones who are investing. By virtue of the size and scale of Gust, we have taken on a pro bono industry world as well, in terms of education, just as Naval [Ravikant] has with Venture Hacks. They started as public education. In our case, we have made it a point to go out and get the best brains in the business to provide help for entrepreneurs in the platform. For example, we have spent an enormous amount of time and effort shooting video tips and training from the world’s leading investors and entrepreneurs, whether it’s people like Basil Peters, who wrote “Early Exits” or Esther Dyson or Josh Kopelman or John May, current head of the World Business Angels Association. We’ve recently shot people like Dave McClure, Mark Suster, Ian Sobieski, and Brigitte Baumann [and people from] from the European Trade Association for Business Angels (EBAN). All of these have been carefully categorized, and they’re available free on the website. We’re also providing free copies of Bill Payne’s book, “The Definitive Guide to Raising Money From Angel Investors.” We have a blog that has just started along with the launch of Gust. It’s a blog on topics related to startup financing with people like Martin Zwilling, Tim Berry, and Antone Johnson. We’re doing our best to educate as well, although perhaps not quite at the level as you are at this point.

SM: Yes. We provide personal coaching.

DR: I think there’s a real need for that. There’s always a challenge between scalability and one-on-one personal interaction. One of things about Gust, in terms of its virality is because it’s used as the investors’ side platform, if an entrepreneur approaches virtually any angel group in the world – not everyone, but probably more than 80%  of them – for funding, the first thing they will ask the entrepreneur to do is share his Gust site. If the entrepreneur doesn’t have one, he’ll be invited to create one at no charge and then share it.

Effectively, the first time entrepreneurs come into contact with an organized angel group, they walk away at the end of the day with their own Gust sites, which they can share with other angel groups or other individual angel investors and the like. It’s viral; that’s one of the reasons it’s growing so rapidly. As an underlying platform for the industry, we are proactively looking to work with people such as you. In fact, I’d love to work with AngelList for their curated introductions to people. But we’ve announced strategic partnerships with Microsoft for BizSpark, with the U.S. State Department, with the Startup America Partnership –we’re providing their backend for capital aggregation – with all of the social venture community from Ashoka and SOCAP (Social Capital Markets) and Investors’ Circle to all kinds of places.

This segment is part 4 in the series : Seed Capital From Angel Investors: David Rose, Founder and CEO of Gust
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