Penned by Forbes as the “Father of Angel Investing in New York,” David Rose is a serial entrepreneur and mentor, Chair of the New York Angels, and the CEO of Gust. A global platform for startup funding, I believe Gust —along with other existing networks of startups and accredited investors— is uniquely positioned to capitalize on the advent of accredited crowdfund investing. I wrote to this in a previous article: Crowdfunding for Startups: An Incumbent’s Market.
Interestingly, in context of investment crowdfunding, it’s likely you haven’t heard much about Gust. Purely speculative, but I suspect this is by design. In my opinion: this is a company you don’t want to take your eye off of.
Formerly known as Angelsoft, Gust is positioned as ‘The Global Platform for Startup Funding.” Its place in the crowdfunding universe? Let’s take a look.
David and his team have spent the last eight years building a globally connected infrastructure for seed-stage financing. The outcome: their software is now the technological foundation of over 1,000 investment organizations, across angel groups, venture funds, incubators, accelerators and business plan competitions. Spanning six languages, the Gust network connects over 150,000 startups from 195 countries with more than 45,000 accredited investors from 75 countries. (As of this writing.)
David has scaled adoption of the Gust platform by effectively distributing it for free — price is a barrier, removing it is one less FUD adopters have to overcome. Build the network first; monetize second. Amazon, Facebook, Twitter, Airtime (oops!): we’ve seen this before. As for the monetization? Well, take it from David. He’s quite forthcoming in the Quoraverse:
Among the forthcoming tools you will see are things like background checks and online deal closing facilities for investors; integrated 409A valuations and enhanced fundraising tools for entrepreneurs; regional ecosystem portals and data analysis for governments and media partners, and an almost infinite number of other possibilities for revenue generation… [Quora]
Online deal closing facilities? Crowdfunding? Hmmm. Tomato, tomato ; ). This functionality, which, to-date, existing SEC regulations have placed out of Gust’s reach, will become viable once Title II provisions of the JOBS Act take effect, looking to be Q1 2014. Of course, this won’t be Gust’s only revenue stream. It will be but one node in a maniacally designed ecosystem of value-added products and services.
As I’ve mentioned before, I see Gust as dominantly positioned to capitalized on the advent of accredited crowdfunding in the U.S. Unlike entrant platforms, they’ve already acquired meaningful deal-flow, and far more importantly, a deep pool of activated accredited investors. Emphasis: accredited investors will be significantly more expensive to acquire than accredited users — by a meaningful order of magnitude, I suspect. Furthermore, once converted from an accredited user to investor, their lifetime value to the network will be largely dependent of how active they are; prolific activity of a single investor on a platform may out-liquidate hundreds of others.
Dominantly positioned for the U.S. market, yes. But focusing on just this is short-sighted. In our chat David said his team is, “seven years into a fifteen-year plan.” The 15-year plan he eludes to? Let’s connect the dots.
Gust has a globally connected pipeline for deal-flow and capital. Startups in 195 countries and investors in 75. As security laws abroad are rehashed to be more conducive to equity crowdfunding —which I believe will happen in an accelerated, if not domino, fashion after the action unfolds in the U.S.— internationally geography will become increasingly irrelevant. Global crowdfund investing regulatory cadence will unlock profound —scratch that: revolutionary— possibilities for early-stage finance. Five, six, seven years from now, just imagine:
You wake up one Sunday, and read your weekly Economist and Al Jazeera. Forming the view that long-term stabilization in the Middle-East looks more promising than the media lets on, you decide to convert your belief into an investment thesis. So, from your couch in New York, you log into a crowdfunding platform, or perhaps an aggregating crowdfunding data service, and begin your due diligence. And in no time at all, you seamlessly self-curate a diversified portfolio of consumer-facing startups in the MENA region. Or perhaps enter a structured portfolio of startups accelerated by a regional branch of Techstars.
Right now, if I want liquidity, I’m slave to the machines and their ~70% algorithmic control of the public markets, both domestically and abroad. But in time, I’ll have an alternative — the global crowdfunding markets. Startup funding globalized, and democratized. Awesome, eh?
I should just leave it at that, but my idealism can’t help but chime in. Apologies for the following tangent, bare with me : ). The financial implications are enormous — as are the social.
As private markets go global, opportunity will follow. The idealist in me can’t help but envision how global crowdfund investing stands to facilitate sustainable and attributable social impact with unparalleled scale and efficacy. Kiva is proof.
A future where entrepreneurs across all geographies, race, gender, and class are provided a global audience to present to. Where global seed and venture capital becomes a new face of philanthropy, and the vehicle of choice for driving sustainable impact. Where individuals continents away can earn a return by investing in skilled and impassioned entrepreneurs who are building local solutions to local problems. Jobs, innovation, impact, created locally — supported globally.
With regulatory cadence, global investment crowdfunding stands to facilitate the delivery of one of the world’s most precious asset to those who need it the most: opportunity.