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?

That’s one of the advantages of having a partnership of two. It’s not like you have to wait until next Monday’s partner meeting. You can say, Hey, we’re going to have a partner meeting right now. Can you hold on for a second? And then we’ll say, Okay, do we want to do this deal?

Irina: At that partner meeting, what do you have to consider when you’re debating whether or not to fund this venture?

Mike: It’s funny, the thing that we talk about always comes back to the same thing, which is, if everything goes right, then this company has a chance to be one of the fifteen most valuable companies created this year.

We’ve done some analysis. If you take the years 2003 until the present, and you take out clean tech and bio-tech and focus just on digital technology, 1,500 companies a year get funded. And of those 1,500 companies, about eighty of them end up being worth $50 million or more; about fifteen of them end up being worth $500 million or more; and about eight of them end up being worth $750 million or more. The entire business is driven by the top fifteen companies.

We’ve been lucky to have invested in some of those companies that appeared that they were the top fifteen companies. For example, Solar Winds went public in 2009 and is worth more than $1 billion; Twitter is a company that we invested in and its latest funding round suggested that they’re in that category; and Chegg, the textbook rental site.

What you learn from these investments is that when you get one of these fifteen companies right, it covers all sins. If you get into one of these fifteen companies, you’re going to make somewhere between twenty and one hundred times your money.

This segment is part 7 in the series : Seed Capital From Angel Investors: Mike Maples, Founder And Managing Partner, Floodgate
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