NYA Member Spotlight - David S. Rose
David S. Rose founded NYA 17 years ago. He is a serial entrepreneur, mentor to many, a best-selling author, and a super angel investor… just to name a few. David has been interviewed many times for his expertise in startups as well as angel investing, and has given Ted Talks (one linked below) as an expert in the VC world. He was kind enough to be interviewed for our member spotlight this month. Read below for his expert advice to founders and investors, and learn about how he started New York Angels almost 20 years ago!
David S. Rose — NYA Founder & Chairman Emeritus
Why led you to start NYA?
After the dotcom crash — which was a searing experience for those of us who had high-flying tech companies in the 1990s whose value evaporated overnight — I took a break from starting companies and tried my hand at investing in other founders I knew through the startup ecosystem. I began investing informally, and then realized that I could shortcut my education by learning at the feet of experienced early stage investors such as Howard Morgan, Josh Kopelman, Esther Dyson and Alan Patricof, all of of whom were early members of NYA’s predecessor group, the Angel Investor Program of the New York New Media Association…which I had helped to found in 1995. When NYNMA itself foundered during the dotcom ‘nuclear winter’ in the early 2000s, I founded New York Angels out of its ashes to help make my own investing more efficient, and allow all of us to expand our deal flow, co-investment syndicates, and knowledge.
What did you do before you were an investor and how has that experience shaped your own investment thesis?
As a fifth generation serial entrepreneur I have been starting companies since I was in grade school. After early careers in government and real estate, I founded a tech company in 1988 that received its first venture round in 1991, during the early days of the tech boom. The company grew from the proverbial side gig into a multi-national with 125 people and investors including Citibank, Richard Branson, Symantec and others. That experience gave me significant insight into the whole startup and fundraising world which has served me well for the past twenty years, and given me extraordinary empathy for founders.
What can founders expect from the Angel investor/founder relationship?
Realistically, they can expect our investment and our moral support…and that’s it. That said, they can *hope* for us to be significant adders of value, through our contacts, our advice and our help with business development and fundraising. In the real world, angel investors play the biggest role at the very, very early stage of a company’s life cycle. If an angel strongly believes in and supports the company as the lead investor, that angel will often serve on the board of directors, possibly even as Chairman of the company. In *those* cases, the founders can expect the investor/board member to be a significant (although not full time or operating) part of the team, providing mentorship, wisdom and experience at the board level. At any give point in my life, probably a quarter of my time is spent working with companies on whose board I sit. I like to think that I (and therefore, by extension, my fellow New York Angels investors) have added substantial value to those companies.
What is one of the best investments you made with the NYA?
Since I’ve been investing with NYA for over 20 years and 120+ companies, there are quite a few. But one of those I’m proudest of is Social Bicycles, in which we were the very first investors and of which I served as Chairman for half a decade. We supported the company in its recruiting, fundraising and operations, and eventually (after it changed its name to JUMP Bikes) were instrumental in helping it get acquired for nine figures by Uber, where it became the initial core of Uber Bikes.
What do you look for in a pitch? In a founder?
I’ve actually done a TEDtalk on exactly this subject, which has become something of a classic and has helped guide over 1.5 million founders with their pitches. It can be viewed at https://www.ted.com/talks/david_s_rose_how_to_pitch_to_a_vc. But in a nutshell the most important thing I look for is to see whether I believe the founder is truly “an entrepreneur”. After that comes the rest of the team, the market opportunity, defensibility, scalability, traction…and whether I find the problem/solution set personally interesting.
How do you spot a good founder?
The top ten things I look for, in order, are: Integrity, Passion, Startup Experience, Domain Expertise, Operational Skills, Leadership, Commitment, Vision, Realism, Flexibility…and a willingness to listen.
What makes a good Angel investor?
Long-term view
Strong economic base and the ability to tolerate losses
High tolerance for risk and failure
Even temperament
Good people skills
Self-discipline
Willingness to learn
Love and respect for entrepreneurs and startups
What advice would you give a founder who is about to apply for funding at NYA?
Read our website! We’re pretty up-front about what we’re seeking, so do your homework. I’d also [modestly] suggest watching my TED talk referenced above, and reading both my own book (The Startup Checklist) and Brian Cohen’s book (What Every Angel Investor Wants You to Know).
What advice would you give to founders who have never fundraised before and do not have strong connections to Angel investors?
If a founder wants to understand who angels are, how we think, and why, read my first book, which has become the standard guide for angel investors around the world (Angel Investing: The Gust Guide to Making Money & Having Fun Investing in Startups). Links to these books (and many other great resources) can be found at davidsrose.zealous.space. I’d also strongly suggest filling out a profile on Gust.com, the company I founded to develop the application processing system for New York Angels and most of the other angel groups around the world. There is no cost at all, and the founder will be walked through an online assessment of their venture, helping them understand what type of financing is likely best for their particular company. Once their profile is complete (and I mean *complete*; I am continually flabbergasted by how many founders simply don’t take the trouble to fill it out in its entirety, including things like an elevator pitch video, bios, etc.), it can be used to apply to New York Angels with a single click…and then the founder can search through the 750 other angel groups that also use Gust to find other groups that might be a good fit.
Have you noticed any investment trends happening now that the economy is opening back up?
“Show me the money!” While ambitious moonshots are still getting funded (primarily on the west coast), post pandemic the bar seems to have been raised for what it takes to be “fundable”. We typically need to see a functional product and real market experience with real customers, not just a pretty pitch deck.
What’s the benefit to YOU, as an investor, of collaborating with other Angels on investments?
There are an enormous number of benefits! Shared deal flow well beyond that I get personally (which is actually pretty substantial, given my profile), the ability to aggregate our smaller checks to ‘punch above our weight’, domain expertise and operational experience well beyond my own, differing perspectives, people with whom to share the load and risk of early stage deals…and most of all a remarkable group of peers, many of whom have become close friends over the past two decades.
Have you ever led a deal? If so, can you speak about your experience? What can a founder do to help facilitate a final investment decision?
I’ve led many, including some of NYA’s most prominent ones (Comixology, Pond 5, JUMP Bikes, and Panjiva) as well as others both challenging and successful, including KoolSpan, Magnify, SetJam, PayPerks, BioScale, LiveLook, Ambient, Ejamming, and many more. The best thing a founder can do is provide us comprehensive information in a timely manner, while keeping us up to date as things change…and then have patience with us because unlike a venture fund, this is not our full time job. We try not to drag things out unnecessarily (which doesn’t help anyone), but we’re far from being extremely efficient, let alone perfect. A founder needs to walk the fine line between being responsive and respectful on the one hand, and being firm and holding our feet to the fire on the other.
What do you think your strength is as an investor and member of the New York Angels?
I have very deep experience as both an entrepreneurial founder and an active angel investor, I’m passionate about things and people I believe in, I’m willing to write checks, and I am usually pretty good at being able to herd chickens!
