Seed Capital From Angel Investors: Mike Maples, Founder And Managing Partner, Floodgate (Part 15)

By guest authors Irina Patterson and Candice Arnold

Irina: What do you think the most important thing that angel-backed founders could do to increase their chances of success?

Mike: I would say do customer development in parallel with product development.

Irina: Could you please be more specific on how?

Mike: A lot of people when they talk about their companies, they describe what looks like an engineering schedule. Here’s when Alpha happens, here’s when Beta happens, here’s when the first customer ship happens. What they end up doing is they build something and then they go get customers.

My view is that businesses don’t just create products, they create customers. So, a lot of times I’ll ask an entrepreneur, What’s your customer creation road map? And they’ll look at me funny and I’ll say, Well, you say you’re going to be in the market this time next year. How many customers will you have created?

Sometimes you get the look of “I didn’t know that was on the test.” And you realize they don’t really get customer development. A lot of people think customer development is interviewing customers or spending time with customers. In my view, you’re trying to create customers just like you’re trying to create product, and you create them at the same time.

Irina: What is the most important thing that angels could do to increase their success?

Mike: I would say to try to stay pure. One of the things that I really appreciate about the angel investing ecosystem is that a lot of the people really are just legitimately good people who have pure motives in helping the companies. And I would say for people to not lose site of that, to not get too financially driven. Try to be a force of good for the companies they care about.

Most angels need to decide, am I in it to make money or am I in it because I just want to work with good people on ideas I’m excited about.

If you’re in it to make money, I think there’s a whole set of things. You want to have a minimum number of deals to make yourself diversified. I think twelve is the minimum for statistical diversification. So, if you think you want to make money doing it, what I usually recommend is doing one deal per quarter for twelve consecutive quarters and commit yourself to that process going in.

If you’re not willing to commit to that process, then you probably ought to view your angel investing as a hobby. That’s okay, but if it’s a hobby and not a business, I don’t have as much advice to offer other than, have fun!

Irina: Thank you, Mike. Fantastic insights!

This segment is part 15 in the series : Seed Capital From Angel Investors: Mike Maples, Founder And Managing Partner, Floodgate
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15