Tag Archives: angelsoft.net

Gust Streamlines the Angel Investment Process

Angel investment, , , ,

Are you hoping to find angel investment for your startup? Are you looking to invest in startups? Go look at gust.com. It’s a better-than-ever first step.

Gust, is the new platform launched last week to replace angelsoft.net. The angelsoft.net platform is used by 600 angel investor groups, 35,000 angel investors, and 125,000 startups. Gust.com is its replacement. Angelsoft.net redirects to gust.com.

TechCrunch covered the new gust.com last week:

On Gust, entrepreneurs will be able to create their own profile, update their company information, build an investment relations site for their startup, collaborate on funding, and most importantly, get connected with angels interested in funding their efforts. Investors will be able to filter and search through the startups listed on Gust. And only those who have been specifically granted access will be able to see the details of a startup’s financials and progress.

That same post included this quote from David Rose, founder of both angelsoft.net and gust.com:

We’ve integrated powerful investor relations tools with direct access to the largest community of established, organized investors, thus supporting the entire ‘pitch-to-exit’ business life cycle. What’s most important is that our platform has gained the trust of the world’s most demanding investor and entrepreneur organizations.

In answer on quora, David added:

The enormous change with Gust is that now the *company* creates a single profile, which is always live and under the entrepreneur’s control. That profile stands alone as a protected web site (with both public and private areas) to which the entrepreneur can provide access to any individual investor he or she wants, whether or not the investor is part of an angel group or venture fund.

I have personal experience with angelsoft.net, so I’m looking forward to switching up to gust.com. We used angelsoft.net to organize the submission and filtering process for investment in the Willamette Angel Conference, in Western Oregon, of which I’m an investor member. Companies submitted their information to us as summaries, videos, and business plans, and we reviewed them. It also managed our communication within the group. And it was free, easy to use, and powerful. I’ve also used angelsoft.net as a judge in several major business plan competitions that use it as a convenient platform for managing submissions and information.

This looks to me like a good structured and organized answer to something people have been asking for since the early 1980s. And that’s from both sides of that table, the investors and the entrepreneurs. People wanting funding for new ventures faced a bewildering maze of possibilities, trying to find interested angel investors, looking for groups, forums, and so on. People wanting to invest had to connect one way or another to deal flow.

And for a good 18-minute view of David Rose, watch his 15-minute TED talk on pitching to investors.

Disclosure: I’m going to be posting on the gust.com blog; and Palo Alto Software products, for business planning, are compatible with the platform.
(Image: screenshot from gust.com)

Bombarding Investors With Your Deal Is a Terrible Idea

Angel investment, Starting a Business, , ,

Subtitle: The deals chase the money. The money doesn’t chase the deals.

Two days ago in Angels vs. VCs on Business Pitches I said our angel investment group looks at all submissions.

That confused my friend Anthony Richardson, who followed up yesterday with this question:

Should an early stage company bombard every online submission under the sun ? It has always been my advice to clients to tell them that it was a complete waste of time, and if I may be honest here; I was fairly surprised to see that you thought differently.

Anthony, I completely agree with what you’ve been telling your clients. An early stage company should definitely not bombard every online submission under the sun. That is, exactly as you suggest, a complete waste of time.

(Aside: misunderstandings are always the writer’s fault, never the reader’s.)

My reference to submissions was very specific. We use angelsoft.net, which is free to entrepreneurs and angel investors, and is used by about 400 other angel investors.

We would never consider investing in a company without getting to know the people personally. Our review process first narrows them down to about a dozen or so, using mainly the executive summaries. From there we break into teams, visit their offices, talk to their customers, and study their business plans (the buzzword is due diligence) before we make our decision.

I like angelsoft.net because it’s practical, it works, it collects and manages the information, and it’s free for both sides of the table. And several hundred angel groups use it like we do. It’s free for entrepreneurs and angel investors.

But submitting to us through angelsoft.net is not just submitting online. While it may be possible to use it to submit to lots of groups, that won’t work. Almost every group that uses it has its specific criteria. For example, our group looks only at Oregon companies. We’ve made a couple of exceptions for companies in Southern Washington wanting to move, but neither of them won.

Angelsoft.net does allow what it calls “bulk” submissions, meaning subsmissions to multiple groups. We don’t look at them unless they’re in Oregon. I doubt that other groups look at submissions outside their criteria either.

I’ve been watching online business plan posting sites since I finished the first Business Plan Pro in 1995. My company owns one of them, secureplan.com, but only as a convenience to our software users. It lets them post a plan online instead of printing it. Investors don’t browse it; they need an owner’s specific login information for each plan they see. And we don’t charge for it.

Seriously: real investors don’t browse the web business plan posting sites.

Those sites that charge you money to get listed where investors will find you? Assume that’s a complete waste of time and money. No, I don’t know them all. Things do change. In 15 years I’ve heard of one single deal that started with an online listing. I’ve heard serious investors have concerns about deal flow, but that doesn’t mean they’re browsing business plan posting sites.

If you’re serious about getting investment, do it right. Choose your targets very carefully. Look for close matches between what you have and what they want. Shotgun scattering will never work.

Angel Funding Waiting for the World to Change

Angel investment, , , ,

Ever since I started in high tech in 1979, angel investment has been an amorphous, thoroughly disorganized, ad-hoc phenomenon that occurred somewhere between friends and family, on one end of a scale, and with venture capital, on the other. It was hard to find and hard to describe. People were selling lists of angel investors to entrepreneurs who were looking for investment.

I can’t say that the system worked; actually, I can’t even call it a system. Angel investment just happened. Securities law severely restricts the process of looking for investors, and, furthermore, also limits who is legally allowed to invest. An accredited investor has to meet minimum wealth requirements.

Last week I had a chance to talk at length with David Rose, founder of angelsoft.net. He  guest posted on this blog last Spring. Meanwhile, I’m getting more involved in my local angel investor group (Willamette Angel Conference), and using angelsoft.net software more. And David told me he’s continuing to bring angel groups together, and organize. So I’m hopeful about that.

The long-term dream is a smoothly working market bringing startups together with investors who understand the risks, have money, and want to invest it.

There are at least these three problems to solve:

  1. Organizing the information into a market-like system. Angelsoft.net is making real progress. Startups get an orderly application process, angel investors and groups of investors get better deal flow, and there’s more information for both sides. Also thefunded.com continues to add to its database of founder reviews of investors. Not to mention how much more information about angel investors is now available easily through simple Web searchs.
  2. Legal restrictions. And here I’m not sure how long it will take, or even if a solution is necessarily a good thing. It’s not simple. Restrictions on soliciting investors and qualification hoops for investors were made law back during the Great Depression because people were getting swindled. The law regarding information is way behind technology. The assumption that wealth is equal to sophistication in startup investment is questionable.
  3. Processing investment opportunities. I’ve been meaning to post for three months now about Revolutionizing Angel Funding on The Emergent Fool. That post, by Kevin Dick, talks about setting up a system to process startup deals automatically, using an online screening process. I’ll be watching that one. I’m not convinced that the way angel investors process deals, one by one, case by case, is really a significant problem. But it’s an interesting idea.

Overall, I’m intrigued by how much organization has happened in the last year or two.

I do believe there’s an opportunity for healthy disruption in this marketplace. It may be something like what kiva.org is doing for microlending, or what prosper.com was doing for peer-to-peer lending before (gulp) it got a cease and desist order from the Securities and Exchange Commision (SEC). On one side, a lot of people who know what they’re doing would like to invest in some selected startups. On the other hand, a lot of startups would like to work with investors.

The toughest part of all this is securities law. A lot of what might really make a huge difference in organization of angel investment is on the brink of breaking laws governing fishing for investors. I’m waiting, cautiously optimistic, to see how this develops. And how long it takes.

More About Angelsoft.net and Angel Funding

Angel investment, Starting a Business, Venture Capital, , , ,

(I posted Organizing Angel Investors Monday on Up and Running about positive developments in angel funding. David Rose, CEO of angelsoft.net, added the following as a comment to that post. Although I haven’t had guest posts on this blog, David’s comment is worth it. And I’ve been using angelsoft.net for a while now, I know it’s good. So I’m posting David’s comment here as if it were a guest post.)

Tim, you are absolutely correct in your observations about what’s happening in the angel world. Historically, angel investing has tended to be a personal, haphazard thing, with entrepreneurs and angels finding each other almost by chance. During the dot-com boom, however, angels in various cities who repeatedly found themselves in the same deals began to organize into semi-formal groups, in order to share deal flow and expertise, and pool their funds to make larger investments.

After the crash, when venture capital firms effectively stopped funding during the ‘nuclear winter’, the Kauffman Foundation, dedicated to supporting entrepreneurship, figured that the best way to help entrepreneurs was to jump start angel investing (which, as you know, accounts for more startup investing annually than all VCs put together.)

So Kauffman convened a summit meeting of the major angel groups from around the country, and out of that arose the Angel Capital Association, the professional alliance of angel groups, and the Angel Capital Education Foundation, which trains angels and entrepreneurs in best practices. This past week we held the 2009 ACA Summit in Atlanta, at which over 300 leading angels and group managers from around the country got together to meet each other, share best practices, and work on syndicating deals.

At the same time the ACA was being formed, many of the angel groups were in need of a solution to help administer their organizations, encourage collaboration among angels, and enable cooperative investments both among groups, and between angel groups and VCs. Thus arose Angelsoft, which today provides the back-end infrastructure for virtually the entire global, organized angel investment community. Five years after its founding, Angelsoft supports 17,000 accredited investors in 450 angel investment groups in 45 countries.

While Angelsoft is not a ‘matching service’, nor does the company itself make investments, the platform functions much like the CommonApp for college admissions. The difference is that because the vast majority of angel groups use the system to manage their deal flow and collaboration internally, there aren’t parallel systems. So if an entrepreneur applies for funding to a group using Angelsoft, they’ll be working on an Angelsoft-powered application no matter how they got to the group in the first place.

This provides a number of advantages, among which is the need to only fill out an application once. After that, applying to any other Angelsoft-based group is a matter of a single mouse click. And entrepreneurs can find groups that invest in their type of company by using the Kayak-like sliders in Angelsoft’s investor search engine at http://angelsoft.net/startup-tools/investor-search.

Another by-product is that for the first time entrepreneurs have some visibility into the often-murky operations of angel groups. Because Angelsoft powers all the group’s processes, the system can provide entrepreneurs with statistics including how many other companies have applied for funding this month, how long it typically takes the group to review a submission, what percentage of applicants to a group actually get funded, and so forth. For example, check out the profile page for New York Angels, my home angel group here on the east coast, at http://angelsoft.net/angel-group/new-york-angels

Finally, one of the coolest things is that with all the angel groups on a single platform, Angelsoft is now also being used by other parts of the early stage industry, including, as you pointed out, VCs. Over 50 venture funds use Angelsoft to process their deal flow, and many of the leading venture law firms, such as DLA Piper and Cooley Godward, are beginning to use the platform to refer clients to angel groups and venture funds for consideration.

We are living in a fascinating time with fast moving changes in every area, and the expansion and growth of the Internet promises to bring some much needed order to the chaos of early stage funding!

-David S. Rose
CEO, Angelsoft
Chairman, New York Angels