Silicon Valley angel investor Mike Maples Jr., known for his early investments in Digg and Twitter, announced recently that his firm Maples Investments has rebranded as FLOODGATE in an effort to fulfill his experiment of becoming a "super angel" firm. The term "super angel" mostly speaks for itself: instead of carefully picking a few select companies to invest in each year, super angels broadly place more money in a larger number of early-stage startups.
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By making the shift from Maples Investments to FLOODGATE, Maples is jumping into the super angel game with both feet in attempts to take the firm to "the next level." He hopes that the creation of FLOODGATE will "address a big gap in venture capital" between seed level angel investments and larger rounds from traditional VC firms.
According to the newly rebranded homepage, the super angel strategy is a response the growing number of startups, the falling number of IPOs, and the rising level of VC investments - all of which make finding early-stage funding more difficult. Additionally, the site offers that super angel investments can provide more exit options.
"If a business raises a small amount of initial capital, then exceeds its early milestones and decides to swing for the fences, it can then raise a larger sum at a higher price, while preserving ownership," the site says. "If the business is not ready for rapid growth, it preserves the option for an exit at around $50 million, while still delivering a high return for investors. This dual-track model is less available to companies that raise large amounts of money early."
Are we witnessing the birth of a new branch of venture capital? It is interesting to consider the gap that Maples is attempting to fill; smaller individual seed level angel investments at one end, and the hundreds of millions of dollars that VC firms have been known to invest at times. It certainly seems that there is an opportunity for endowed individuals to invest at a higher level than a typical angel would, but at the same time there are smaller VC firms that focus smaller investments on young companies.
Can super angels sit in the space between angels and firms that target smaller amounts at early-stage startups? Will more of the larger firms begin to invest smaller amounts instead of waiting for the companies worthy of a nine-figure investment? Will angels start investing more of their own money closer to super angel levels? Is FLOODGATE's method of casting a wide net in hopes of catching one or big fish a wise choice? Will their approach put pressure on other angels to invest more or at a higher level?
It is unclear what, if anything, will happen, but what is clear is that FLOODGATE plans to push more money into the early-stage startup market, which is great news for the entrepreneurs out there looking for funding. Let us know how you feel about the idea of super angels and their effects on the VC industry in the comments below.
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