David Rose says technology has opened up possibilities for all investors but that same technology also raises expectations for entrepreneurs.
Mr. Rose is a featured speaker at the Crowdfunding Conference 2016 – a forum for networking and discussion about raising capital in the digital era. Happening in New York on Oct. 6-7, the Dealflow event features more than 100 of the most influential investors and dealmakers in the industry. He will participate in a one-on-one fireside chat with Locavesting author Amy Cortese about leveraging online membership networks to market private placements to accredited investors.
Since founding his first company at the age of 10, Mr. Rose has founded six more. He has also raised tens of millions of dollars of venture, strategic and institutional capital. Described as a ‘world conquering entrepreneur’ by Business Week, Mr. Rose has also been named to the Inc 500 list as CEO of one of America’s fastest growing companies.
After establishing himself as an entrepreneur, Mr. Rose became an angel investor, founding and still chairing New York Angels, one of the country’s largest and most active angel investment groups. He serves on several boards, is managing principal of Rose Tech Ventures, chairs Egret Capital Partners and is a track chair at Singularity University.
Mr. Rose is also once again an entrepreneur as the founder and CEO of Gust, a global SaaS platform for the sourcing and management of early stage investments. Gust supports collaboration between entrepreneurs, investors and angel investor networks by virtually supporting every step of the investment relationship from initial pitch to successful exit. Gust powers more than 1,000 investment organizations in 80-plus countries and adds 10,000 companies each month to its 500,000-company data base. More than 50,000 accredited investors have signed on.
“People wake up, get out of bed, hit the floor and think they’ll (quickly) get money, fund their company and go public,” Mr. Rose said. “The reality is very different.”
If the entrepreneur can even get a meeting with potential investors, the odds of getting capital are 40-1 with angels and 400-1 with venture capitalists, Mr. Rose said.
Thanks to technology, those odds may be getting longer, he added. The cloud, open source, even the internet mean there is no excuse for startups to not have their product well-developed and tested before meeting with investors. Those investors, who used to have to hear of a great opportunity and travel to a meeting to learn more now just have to turn on the computer and log on to Gust or another network.
“There are fewer restrictions,” Mr. Rose said. “Anyone can invest under the right circumstances.”
Companies who can leverage the passion of the crowd are off to a good start with crowdfunding, though they still need a solid base of friends and family, Mr. Rose cautions. Many successful startups will see the biggest benefit from crowdfunding through a formal structuring of what used to be an informal process.
I asked Mr. Rose about the growing sense that the equity crowdfunding community needs a home run, that a few successful exits will get the ball rolling on a sector many have high hopes for.
He preached caution.
“The average holding period for an angel investment is nine years.”