Woodland-Hills based CrowdGather has been growing quickly this year, and now with over $90M in market cap they’ve certainly raised enough capital to keep up with their growth. So when we sat down to interview CrowdGather’s CEO, Sanjay Sabnani, the conversation quickly moved beyond their product strategy and into an area that many entrepreneurs would find interesting — raising money without the help of Venture Capitalists.

We also spoke with Sanjay about Gravity.com (formerly Blue Rover Labs), an LA-based startup that received $10M in VC funding last year and is entering a space that CrowdGather has been monetizing for years (we wrote about both companies a few months ago).

Here’s our interview with Sanjay:

There’s been a lot of interest in your company lately, so much so that Internet Review recently listed you as a company to watch in 2010. What is generating all the buzz?

I am not sure what has really happened in terms of the increased following for our company and the stock, but I would guess that it is part of a renewed investor interest in Internet companies as the engine to drive the future economy. When we first became a public company in April 2008 there was little to no interest in small companies in our sector among public investors.

Can you put some metrics behind this interest? Exactly how much have the indicators spiked lately?
Our stock (OTCBB: CRWG) has hit $2.00 today on over a million shares of volume. This is compared to $0.70 in May of last year when we raised our last financing. At that time our average volume was less than 10,000 shares per day.

For those who aren’t familiar with CrowdGather, how would you describe your business model?
We are focused on building a robust content network around forums. These are message-board communities that exist on every conceivable topic under the sun. We acquire them outright and then create vertical channels in order to achieve critical mass for advertisers and ad rep firms that do business with us. In essence we are as much a real estate driven model as we are a technology one. We buy assets with the potential for generating recurring cash-flows and we keep working towards getting higher payouts until we pay off the properties. Once we have done that the cash-flow becomes ours in perpetuity as long as we maintain and grow the communities.

Many tech companies are pursuing VC funding these days, but you’ve taken a different path. Can you explain it for us?
As a long time executive at small public companies and as a former member of the securities industry, I know the public markets quite well. I didn’t have much of a relationship with the VC and angel investment communities so my decision to go public via a reverse merger was a trade-off of doing business with the “devil you know” versus the one you don’t. Basically an entrepreneur is taking the risk that it will be easier to find capital as a public company- even a small, illiquid one in the beginning.

How did this approach work out for you in the early days?
My confidence was tested when the markets began to collapse in the summer of 2008, a few months after we became public, but we have hung in there and managed to keep raising small amounts of capital to drive our growth.

For entrepreneurs who are curious about this approach, would you say it is better than approaching VCs? How does it affect exit prospects?
It is not necessarily a better approach. As I mentioned, it is a function of comfort and access to capital. I felt my prospects were better among investors who look for growth companies that are public. As far as exit prospects, the irony is that by being public you are already at the finish line because you have a market available for your shares to be bought and sold. The problem can arise when you have insufficient trading liquidity in your shares, or if your market capitalization drops below what you believe your company should be worth in a financing or exit round.

How about the regulatory process? Is it still difficult and expensive to navigate?
There are higher costs to being public- that is for certain. As far as difficulty, the key is to surround yourself with team members that know what they are doing. I have been fortunate in finding the right Board members and advisers in order to reduce the cost of outside consultants.

Let’s talk about competitors. What do you think about Gravity.com? They seem to be entering a market that you’ve been working in for a couple years now.
Gravity.com is exciting for us because they demonstrate that VC’s believe that there is value in conversations that reside on forums. Gravity has been blessed with a $10 million first round and a sharp team of ex-Myspace executives, but they are in private beta right now so I am not in a position to comment on what they intend to do exactly. If they are a standalone offering then they will be limited, but if they are focused on helping the owners of existing communities, as we do, then the sky is the limit.

Raising over $10M from several blue-chip VC firms is impressive. Knowing the industry as you do, why were they able to raise so much?
$10 Million for a first round is an impressive amount considering the economy. It is more than twice as much as we have procured in financing even though we have been around for longer than they have. I believe that the excitement in Gravity.com stems from the caliber of their management team coupled with the simple logic of the fact that forums predate the Internet and they are not going anywhere any time soon. Facebook and Twitter have tremendous value for real-time, surface discourse, but if you want to dive deep into a subject and really ‘geek out’ — you will find yourself on a forum seeking the wisdom of the experts in the crowd. Your FB buddies will not help you come up with an alternative methodology for balancing the ecosystem on your nano-planted tank, but a visit to a site like our aquaticplantcentral.com will almost overwhelm you with depth of knowledge. When people are ready to take the training wheels off their Internet experience they will end up on forums. We are the help desk of the Internet.

Since you are both operating in a similar space, has the recent interest in Gravity benefited CrowdGather in any way?
I joined my first message board in the 90’s; I acquired my first forum in 2002; I created an LLC around that site in 2003; I started building a network of sites in 2007, and I finally made it my full time focus in 2008. The only place I have seen us mentioned in the same context is on TrendSlate.com. I do point their existence out to our shareholders as proof that there is professional investor interest in their sector, but I am not sure of any other crossover. Their approach could be fundamentally different and based more on technology and analytics rather than old fashioned community building.

Any plans to reach out to Amit, Jim, Steve and the rest of the Gravity team to talk about the industry?
I would welcome a conversation, especially since it is interesting that both CrowdGather and Gravity have Indian CEO’s and are both are based in Southern California. I believe that a discussion is more likely to occur after they launch since they are probably in a private beta for strategic purposes.

Follow Sanjay on Twitter @crowdgather