Thoughts on startups by investors that
fund them & entrepreneurs that run them

Viewing all posts by David S. Rose

user David S. Rose Founder and CEO,
Gust

David has been described as "the Father of Angel Investing in New York" by Crain's New York Business, & a "world conquering entrepreneur" by BusinessWeek. He is a serial entrepreneur & Inc 500 CEO who chairs New York Angels, one of the most active angel investment groups. David is also CEO of Gust.

Of the private companies trading on secondary markets, how much of those companies’ stock is available through the secondary market?

On average…none.

The secondary market for private company stock is brand new, and so nascent that it is virtually nonexistent.

For a very brief time, when Facebook, LinkedIn, Groupon and Zynga were still private, there was a quick flurry of private secondary sales through platforms like SecondMarket and SharesPost. But there was much, much, much more smoke than fire, and

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What tools can I use to manage relationships with investors?

Gust.com is the most widely used tool platform for both sides, with hundreds of thousands of companies and tens of thousands of investors using it to track and manage their relations with the other. It’s the official collaboration tool of the Angel Capital Association (and the equivalent national angel investor federations in 20 other countries.) It’s also used by over 300

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Can a private company take investment money from anyone?

Unfortunately, a private company in the US may not take investment money from “anyone”. The only people who are legally eligible to purchase an equity interest in a private company without a great deal of special paperwork are, as you noted, Accredited Investors. These are defined as a person with net assets of over $1 million (not including the value of his or her primary

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As a new independent angel investor, how will I find new companies to invest in?

The two sites you mentioned are both secondary listing services, for later stage companies. For a new angel investor, by far the best thing to do is to join a local angel investor group that belongs to the Angel Capital Association. There are hundreds of them, with at least one in every state. Major metropolitan areas typically have more than

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How does a VC keep track of his/her investment?

Professional investors typically have a range of information rights that they negotiate for when making an investment. While not every investor will have every right (or every right with the same frequency), the types of things we’re talking about include:

Seat on the Board of Directors Non-voting Board Observer Seat Monthly, quarterly or annual financial statements (audited or unaudited) Monthly,

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Does a startup need a CEO from the start?

You certainly don’t need a full executive suite if it is only a few co-founders. However, in my experience every organization needs one person on whose desk the buck stops. You can call this the President, or General Manager, or Executive Director, or Chairman, or Man in the Moon…but it has to be one person who is at the very least the

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What percentage of the business should I ask for if I came up with the idea but didn’t have time to work on the business?

As Peter Van Dijck noted, the answer is 0%.  “Ideas” are simply not compensated in today’s business world, because there are so many of them out there—even good ones.

*original post can be found on Quora @ http://www.quora.com/David-S-Rose/answers *

In a seed round, is it poor form to accept a lower cap from later investors?

There are a [very] few companies, mostly on the West Coast, that have done convertible rounds with differing caps, but it’s unusual, hard to do, and not something that will endear you to the less-fortunate investors.

What is the worst startup pitch ever?

Take your choice (these are both real, honest-to-God pitches, and I’ve got the originals in my possession):

Contestant A CluelessCo is an internet startup company seeking $2 million of equity financing to fund our company for at least one year. CluelessCo will become the main consumer outlet for the internet, digital cable and satellite TV, and cell phones and PDAs.

What’s actually required to start or close a funding round?

Technically, a “funding round” simply means a company accepting one or more investments from one or more investors on similar terms within a certain period of time. As such, this could cover many different things, such as:

Your parents loaning you money to cover your expenses while you code your product 25 individual angel investors funding a startup on a

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