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Seed Capital From Angel Investors: Mike Maples, Founder And Managing Partner, Floodgate (Part 11)

By guest authors Irina Patterson and Candice Arnold

Irina: So, you really don’t have a lot of interest in the niche markets?

Mike: This is another view that we have that’s a little bit subtle, but we don’t talk in terms of available markets. The reason is when I can analyze the total available market, the market’s too obvious, and if the market’s obvious, then big companies are probably already going after it. >>>

Seed Capital From Angel Investors: Mike Maples, Founder And Managing Partner, Floodgate (Part 10)

By guest authors Irina Patterson and Candice Arnold

Irina: At what stage of a company’s development do you usually invest? Would you invest in a company that was just an idea on paper?

Mike: It varies quite a bit. We’ve funded PowerPoint pitches before, but generally speaking we don’t do that. Our basic belief is that if you consider the fact that the costs to go to market have gone way down, and the costs to experiment have collapsed to near zero, an entrepreneur should be able to demonstrate a series of experiments that they’ve already run. If it doesn’t cost anything to experiment, there’s no point in showing up to an investor with just an idea. >>>

Seed Capital From Angel Investors: Mike Maples, Founder And Managing Partner, Floodgate (Part 9)

By guest authors Irina Patterson and Candice Arnold

Irina: How many deals do you think you’ll be making over the next 12 months?

Mike: We’ll probably do somewhere between ten and fifteen investments.

Irina: How much do you anticipate you will invest per deal?

Mike: That’s good question. Typically, we invest between $250,000 and $1 million. It varies . . . very situational and dependent on the circumstances. >>>

Seed Capital From Angel Investors: Mike Maples, Founder And Managing Partner, Floodgate (Part 8)

By guest authors Irina Patterson and Candice Arnold

Irina: How do you conduct your due diligence?

Mike: That’s the hard part because Ann and I are little bit emotional in our investing styles. We believe that the greatest outcomes tend to be controversial when they’re funded. For example, Twitter was very controversial when it was funded because it didn’t have a revenue model. People were saying, You’ve got to be kidding me . . . 140 characters or fewer, no road map, no business model, they can’t keep the site up, what are you thinking? >>>

Seed Capital From Angel Investors: Mike Maples, Founder And Managing Partner, Floodgate (Part 7)

By guest authors Irina Patterson and Candice Arnold

Irina: Are there any other meetings that you have for entrepreneurs?

Mike: Sometimes we’ll introduce the entrepreneur to other people in our network, both to try to help the entrepreneur but also to assess the opportunity. But for the most part, if the phone call goes really well and we do a face-to-face meeting, forty-five minutes into the meeting, Ann and I will say, Hey can we just talk for a second?

And we’ll go into the other room and we’ll talk and we’ll either come back and say, This is great, we’re interested but we’re not ready to invest at this time, or we’ll say, We are ready to invest at this time. What needs to happen for us to figure out if there’s a deal to be done here? >>>

Seed Capital From Angel Investors: Mike Maples, Founder And Managing Partner, Floodgate (Part 6)

By guest authors Irina Patterson and Candice Arnold

Irina: How many pitches do you receive in a month from all your sources?

Mike: We get about 600 pitches.

Irina: Out of all of those pitches, how many deserve a closer look?

Mike: Out of 600, we’ll probably meet with about thirty or forty. And we might fund one of those companies in a month. >>>

Seed Capital From Angel Investors: Mike Maples, Founder And Managing Partner, Floodgate (Part 5)

By guest authors Irina Patterson and Candice Arnold

Mike: It’s interesting – and maybe you’ve experienced this, too – in a lot of ways, deal flow, if you’re not careful, becomes like messages in your e-mail inbox. And if you’re not careful, you find yourself becoming an efficient processor of things that don’t matter that much.

So, we try really hard to always come back to the central premise, which is how much of our day are we spending with really smart people? If we’re spending most of the time with really smart people in the emerging areas of technology that we think are going to have a difference, then usually, we judge ourselves as spending our time well. >>>

Seed Capital From Angel Investors: Mike Maples, Founder And Managing Partner, Floodgate (Part 4)

By guest authors Irina Patterson and Candice Arnold

Irina: What is your current source of deal flow?

Mike: That’s a good question. There are quite a few, actually. Some of it just comes in naturally from business plans at Floodgate.com. We probably get about one hundred plans a week from that channel.

Then we get a lot of referrals. Some referrals come from other angels, other venture firms. Increasingly, a lot of the referrals come from entrepreneurs in our network. So, for example, ngmoco, which is a gaming company on the iPhone, we found out about that company from Kevin Rose, who’s the founder of Digg. >>>