Angel Investing: The Gust Guide to Making Money and Having Fun Investing in Startups


Every year in America, over 600,000 new businesses start up andhire their first employees. Many will fail, but some of them willbecome the legendary businesses of the future, transformingindustries and making millions for the angel investors who helpedfund them in their early days. Angel investing, once the exclusiveprovince of multi-millionaire high-rollers, has now entered themainstream, with more than $20 billion being invested annually byindividual investors in the US alone. Contrary to popular belief,access ...

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Every year in America, over 600,000 new businesses start up andhire their first employees. Many will fail, but some of them willbecome the legendary businesses of the future, transformingindustries and making millions for the angel investors who helpedfund them in their early days. Angel investing, once the exclusiveprovince of multi-millionaire high-rollers, has now entered themainstream, with more than $20 billion being invested annually byindividual investors in the US alone. Contrary to popular belief,access to these high risk/high return investments—and successin startup investing—doesn’t have to be a matter ofluck or connections. Angel Investing: The Gust Guide to MakingMoney & Having Fun Investing in Startups shows how smartinvestors with the right strategy and a long-term perspective canachieve annual returns of 25 percent or more from a well-designedangel portfolio.

Written by David S. Rose, the founder of Gust—the globalplatform that powers the world of organized professional angelinvesting—Angel Investing is a comprehensive,entertaining guide that walks readers through every step of the wayto becoming a successful angel investor. It is illustrated withstories from among the 90+ companies in which David has investedduring a 25 year career as one of the world’s most activebusiness angels and includes instructions on how to get started,how to find and evaluate opportunities, and how to pursue andstructure investments to maximize your returns.

From building your reputation as a smart investor, tonegotiating fair deals, adding value to your portfolio companiesand helping them implement smart exit strategies, David providesboth the fundamental strategies and the specific tools you need totake full advantage of this rapidly growing asset class. He detailsthe advantages of joining an angel group, explains how seed andventure funds can help leverage an investor’s resources, andreveals how recent regulatory changes and new online platforms aremaking startup investing accessible to millions of Americans.

Making money is no longer about sitting back and reading stocklistings, David says. It is now about being part owner of anexciting startup that can be fun and financially rewarding.Angel Investing teaches investors how to carefully selectand manage investments, establish a long term view, and approachangel investing as a serious part of an alternative asset portfoliowhile also enjoying being an integral part of an exciting newventure.

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Editorial Reviews

Library Journal
This how-to guide is aimed at readers interested in learning more about the relatively new field of angel investing, which involves investing in a variety of private, start-up companies with high-growth potential. Entrepreneur Rose has been an angel investor for about 15 years and founded the New York Angels group and, a platform for connecting entrepreneurs and investors. His investing background proves an asset, as he takes a multidisciplinary approach. Angel basics—such as financial skills and what to look for in a start-up company—are included, as well as more peripheral topics like funding platforms and how to become better known in the field. Rose addresses both the pros and cons of the practice while emphasizing that not everyone is cut out for it. He states that if they work judiciously these investors can financially outperform those who focus on other investment classes—however, the evidence cited comes from the author's website. While this title is clearly written, Rose plugs that site a bit too often. The book is also presented in first person, which at times makes it seem too much about the author. VERDICT For those already familiar with more common forms of investing (venture capital, mutual funds, etc.) who would like to learn more about angel investing.—Leigh Mihlrad, FDIC Lib., Washington, D.C.
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Product Details

  • ISBN-13: 9781118858257
  • Publisher: Wiley
  • Publication date: 4/28/2014
  • Edition number: 1
  • Pages: 304
  • Sales rank: 234,028
  • Product dimensions: 6.10 (w) x 9.30 (h) x 1.10 (d)

Meet the Author

DAVID S. ROSE is a serial entrepreneur, Inc 500 CEO andone of the world’s most active angel investors. Described byForbes as “New York’s Archangel,” byBusinessWeek as a “world conqueringentrepreneur,” and by Red Herring as “patriarchof Silicon Alley”, David has founded or funded over 90 hightech companies. He is the founder and CEO of Gust, theinternational collaboration platform for startup financing used byover 50,000 accredited angel investors, 1000 angel groups andventure capital funds, and 250,000 entrepreneurs. Gust received theSIIA CODiE Award for Best Collaboration Solution in both 2012 and2013, as well as the 2012 SWIFT/Innotribe Award as theworld’s most innovative financial technology company.

David is also Managing Partner of Rose Tech Ventures, an earlystage angel fund; Founder and Chairman Emeritus of New York Angels,the most active angel group in America; and Associate Founder andFounding Track Chair for Finance, Entrepreneurship and Economics atSingularity University, the Google/NASA-sponsored post-graduateprogram in exponential technologies. A native New Yorker, David hasa BA from Yale University, an MBA in Finance from Columbia BusinessSchool, and a D. Eng. h.c. from Stevens Institute ofTechnology.

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Table of Contents

Foreword Reid Hoffman xv

Introduction: How I Became An Angel Investor xvii

Part I The Basics of Angel Investing 1

1 The 25 Percent Annual Return:Why Everyone with Six Figures toInvest Should Consider Angel Investing 3

2 Plus, It’s Really Fun! The Nonfinancial Rewards of Beingan Angel 23

3 The Portfolio Theory of Angel Investing: Why Every Angel Needsto Invest in at Least 20 Companies 37

4 The Financial Life of a Startup: Where Angels Fit in the BigFinancing Picture 47

Part II The Nuts and Bolts 55

5 Develop Your Deal Flow: Sourcing and IdentifyingHigh-Potential Opportunities 57

6 Bet the Jockey, Not the Horse: Evaluating the Entrepreneur andPicking the Right One to Back 67

7 Here Comes the Pitch: Listening to the Story Does It MakeSense for Your Portfolio? 77

8 Look Under the Hood and Lead a Deal: Coordinating DueDiligence and Running the Show 87

9 Valuations and Expectations: Discovering the Secret Economicsof the Angels 93

10 Investment Rounds and Their Forms: Common Stock, ConvertibleNotes, or Preferred Stock? 109

11 The Art of the Angel Deal: Negotiating a Win/Win Relationshipwith Your Entrepreneur 121

12 Term Sheets and Closing: Trust Everyone…but Cut theCards Anyway 127

13 After the Investment: Managing Your Portfolio and AddingValue as an Active Angel 133

14 Exits and Other Unicorns: Getting Your Money Out Makes AllThings Right 147

Part III Your Place in the World of Angels 159

15 The Entrepreneurship Financing Ecosystem: Grants, VentureCapital, Accelerators, and Other Players 161

16 Building Your Angelic Reputation: Getting the Best Deals toCome to You 175

17 Joining an Angel Group: Increasing Your Opportunities andReducing Your Risks 179

18 Impact Investing: DoingWell While Doing Good 189

19 Sit Back and Let Someone Else Do theWork: Investing inStartups through Seed Funds and Venture Funds 195

20 Crowdfunding and the Global Revolution: Angel Investing forEveryone 199


A Angel Screening and ValuationWorksheet 205

B Angel Investment Due Diligence Checklist 209

C Gust Convertible Note Term Sheet 215

D Gust Series Seed Term Sheet 223

E Gust Revenue-Backed Note Term Sheet 237

F International Angel Investor Federations 243

G Major Regional Angel Groups 245

H Angel Investing Blogs and Resources 249

Glossary 253

Acknowledgments 265

Index 271

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