At the Central Texas Funding Forum today you can hear the keynote speech from David Rose, chairman of the board of the New Yorks Angels Inc. With the help of Matt Scherer, the publicist for this event, we were able to get this interview with him.

What is the biggest challenge facing the investment community here in Austin as well as in New York?

I think the biggest challenge facing the startup and early stage investment community today, is geographically agnostic, namely there is a massive inefficiency in the marketplace. Not enough of the “right” deals are getting into the hands of the “right” investors. In other words, great companies often fail because they don’t find investment, and smart capable investors often don’t see the returns they expected because they don’t have access to enough great deals. The investors are there, willing to invest, and the entrepreneurs are here, desperate for capital, and finding each other has always been the most difficult part. My company Angelsoft is trying to address these inefficiencies by providing a platform where entrepreneurs and investors have greater access to the other, and more information, so with greater knowledge, they may make smarter decisions before they waste each others’ respective time. We provide both sides with efficiency tools to help them sift through their options faster and easier, while at the same time being more responsive and communicating easier.

Before the economic downturn there seemed to much money chasing too few deals. Fred Wilson of Union Square Ventures (a New York based venture firm) wrote a great analysis of this phenomenon in a recent two part blog post on his blog avc.com (The Venture Capital Math Problem).

Now, that may be reversing (at least in the short run) and we may have too many deals and not enough capital. For example, in New York, we are seeing massive layoffs of extremely talented professionals, and therefore thousands of smart, capable people are now leaving large corporations and trying to start their own companies. At the same time investors have lost their appetite for risk with the significant loss they’ve experienced in the market in general.

Will there be a change for the better or for the worst with the state of the current economy?

I don’t know that I’m qualified to make that assessment. But, for what its worth, I think the economy has further to fall. It seems to still be snowballing. Jobs are still being lost, which in turn means less spending, and less money going to companies, which means even more job losses, and less job creation.

I think the investor community as a whole must avoid looking for a “quick fix” to the problem by pouring all its money into one new “hot” (and speculative) industry. Too much promise from one sector, and too much hope on that on thing, and we may find ourselves in the midst of another bubble. I mean if you look back that’s how we recovered from the Dot Com bubble. The recent housing market was a quick fix to the losses incurred during that recession, and Dot Com was really just a rebound from the previous major downturn and the Saving and Loan crisis. We can’t afford to go down that road again.

You’re also working with AngelSoft, a product which helps investors and entrepreneurs. What are some of the recent changes that have been made with this software?

Angelsoft improved our Investor Search Engine earlier this year. It has received a lot of press coverage, and allows companies to look for potential funding sources by filtering from the universe of angel groups and venture funds on the basis of location, stage, industry, etc. We hope that this will help entrepreneurs be more self selective with angel groups they approach for funding, based on the group’s criteria for investment.