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.

Irina: How long does take for a company to receive funding from you?

Mike: Usually, we’re pretty fast. Sometimes we fall behind because we’re so busy, but for the most part, if we have a really good first meeting, we’ll decide within a week whether we’ll invest.

If you’re an entrepreneur talking to us and we don’t decide in two weeks or less, we’re probably not going to invest. We’ve probably just fallen behind in some of our followup and feedback. If we’re going to invest, usually you know that it’s going to happen or that it’s very likely.

Irina: What’s the typical valuation of a company you invest in?

Mike: It varies quite a bit. We’ve invested in companies as low as $1 million, pre-money, and we’ve invested in companies as high as $20 million, pre. Here’s one of the things I’ve learned, you can’t always be too dogmatic about valuation.

Ann and I like to say, There are no good deals; there are only good companies.

So, if you believe that the company has the chance of being one of those 15, our view is, you have to find a way to get involved with that company. If Twitter’s $20 million pre- in the angel round, so be it.

Irina: What percentage of equity in a company do you usually seek?

Mike: That varies as well. We care much more about being in the great companies than how much we own or what the price is. Obviously, if you own more, that’s better. But we’ve never let ownership targets prevent us from getting involved with a great company.

I would say the typical amount that we want to own is between 10% and 15% going in.

Irina: What return, over what period of time, is satisfactory for you?

Mike: It’s funny, and this is another part of our model that may be a little controversial, you know, our view is that we never have an investment thesis. We just say, We think this company has a chance to be meaningful. We’re going to get so many shots at funding these types of companies. And, hopefully, someday, twenty-five years from now, we’ll have been involved with a bunch of really great companies.

It’s sort of like our conversation about deal flow earlier. If you’re involved with great companies, the returns just have a way of taking care of themselves. I learned this when I was at business school . . .  one professor once told me, If you do the right thing, success will follow; but if you only focus on the success, you may never do the right things. So, we just think, If we get involved with the awesome companies, returns will happen. We just have to have that faith.

This segment is part 9 in the series : Seed Capital From Angel Investors: Mike Maples, Founder And Managing Partner, Floodgate
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