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David S. Rose, one of the most prominent angel investors in New York, says data-driven investing is about to change angel investing for good. Rose has founded half a dozen companies, but his latest, Gust, is a SaaS platform connecting entrepreneurs with early-stage investors. With a new product, Gust Launch, Rose aims to help make algorithmic investing possible on a large scale, while standardizing the tools for entrepreneurs to get started on their companies. Once companies begin sharing their data, investors will continue to demand it, Rose says. These are the three data insights we learned from our conversation with Rose.
To hear more of our conversation, check out our podcast episode featuring Rose on Deciding by Data.
1. Analytics is the future of angel investing
Making decisions based on big data, rather than gut feelings, makes for successful investors, David says. A new product, Gust Launch, aggregates company data to easily compare how they perform against others in their industry, without publishing actual earnings. David says that a large dataset of this nature will allow angels to engage in algorithmic investment — automatizing their investments based on how new startups compare to unicorns’ growth trends.
2. The most valuable investment data comes from the earliest stages
David wants new startups to use Gust Launch from their inception so the platform can measure their full lifespan. With these data points, Gust can build a huge database of information, based on everything from credit card statements to analytics. David knows that with more data points, the insights will be more accurate, providing a more valuable service to investors who want to know where companies stand.
3. More data means early-stage startups have more to prove
The barrier to entry for starting a company is diminishing. It doesn’t take much capital to start a website, research competition, or do the basic planning to get your startup off the ground. But this also means that early-stage investing is happening later and later down the development process. David says that angels now look for more proof of concept than ever before, including analytics and sales data. The more data available for angels to base their investments off of, the more necessary it becomes for new companies to keep track of these numbers.