Bloomberg News

NY Investor Starts Online Marketplace to Match Startups, Funds

September 13, 2011

Sept. 13 (Bloomberg) -- AngelSoft, a New York company that makes software for investors, is creating an online marketplace to introduce potential backers to entrepreneurs, betting on an uptick in financial matchmaking from the service.

Founded in 2004 by New York angel investor David Rose, 54, AngelSoft is launching the site for early investment in startups and changing its name to Gust today. The service, which is available to AngelSoft’s 150 venture-capital funds and 35,000 angel investors, adds features for entrepreneurs to post their progress confidentially as well as to manage investor relations.

Investors will be able to use Gust’s software to search for new opportunities, filter incoming requests for financial backing and track their portfolios. To create a full network, Gust will have to attract entrepreneurs from companies like San Francisco-based AngelList network, which matches them to investors, said Matt Harris, a venture capitalist at New York- based Village Ventures.

“As a business plan, having software that investors use and tacking on an entrepreneur-facing entity, that’s sort of the dream, that’s what OpenTable did for restaurants,” Harris said. San Francisco-based OpenTable Inc. allows diners to search for restaurants and make reservations, while providing restaurants an online booking and table management system.

Until now AngelSoft has provided software applications used mostly by angel investors to manage their deal flow and collaborate with other investors.

Standardizing Information

“Right now, there’s no way of standardizing the information or standardizing the transactions,” said Rose, 54, who is also chairman of the New York Angels investing group. “If you get everyone on the same platform, you make it easier and help bring in an enormous amount of capital.”

AngelList founder Naval Ravikant said he’s not worried about users flocking to Gust for the investor-relations component. At least 12,000 startups have applied to join AngelList since it started in February 2010, including 68 yesterday, Ravikant said in a telephone interview.

“Most professional high-quality angels and individuals use a very sophisticated tool to manage deal flow. It’s called e- mail,” Ravikant said.

Harris, who has been in venture capital since 1995, said the number of requests he receives for funding has increased in recent years, a trend that might boost demand for a service like Gust.

Venture capital invested $7.6 billion in 768 deals with private companies in the second quarter, according to CB Insights, a New York-based company that tracks venture capital and angel investment. It was the third straight quarter of growth, the group reported.

--Editors: Donna Alvarado, Stephen West

To contact the reporter on this story: Sarah Frier in New York At sfrier1@bloomberg.net

To contact the editor responsible for this story: Peter Elstrom at pelstrom@bloomberg.net


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