Renowned individual investor Mike Maples, an early proponent of consumer Web 2.0 startups and an active investor in the space, believes the party may be winding down, and he’s already grabbed his coat and hat. In a phone conversation a little earlier this afternoon, he said he has switched his primary focus to business software and services. “I’d say I’m spending 75 percent of my time there now.” Of the consumer Web, he asked: “How many social networks are people going to sign up for?”
The shift is sure to draw attention. Maples, who cofounded broadband software developer Motive in 1997, began backing a number of high-profile deals in 2006 after raising a $15 million fund from nine individual investors and Austin Ventures. Among his best-known investments — and there are between 15 to 20, Maples estimates — are the social news site Digg, microblogging company Twitter, and Kongregate, a site for players and developers to test out and play online games.
Though Maples has yet to see any exits, on the promise of the startups he has backed he was able to raise a $33 million fund this spring, including from institutional backers Horsley Bridge, The University of Chicago, and Weathergage Venture Capital.
Maples says he began looking into business software and service companies about a year ago, when a lot of what he was seeing on the consumer side were “derivative ideas.” As an investor who has historically committed an average of $500,000 per company, Maples wasn’t finding enough reasonably priced opportunities anymore, either. “When a sector has a lot of VCs in it, it’s dangerous to be a lightweight capital provider. You just get overwhelmed by the amount of money out there.”
Maples — who is investing his newest fund with partner Ann Miura-Ko, formerly an analyst at both McKinsey & Co. and Charles Rivers Ventures — says that he has made commitments to four consumer-facing startups and four business-focused startups from his new fund. “You don’t want to abandon captured land,” he jokes of the consumer deals, which continue to come his way.
Still, Maples says he’s spending a little less time with pals like Ron Conway in the consumer space, and more time with a group of angels that’s just now coalescing around the same types of deals that’ve begun to interest Maples: business-centric startups with a viral component. San Francisco-based DemandForce, for example, sells software to help dental offices manage communications with their customers. But it also has an agreement with Google that Maple is hoping will eliminate any need for the company to market its services. (If you Google a dentist in some markets right now, a customer review in DemandForce’s system will pop up, which could sway which dentist you visit. The idea is for dentists who aren’t using DemandForce to catch wind of this development, briefly scratch their heads, then call DemandForce.)
Among those in Maples’ burgeoning new network are Steve Blank, cofounder of e.piphany, which went public in 1999; Foundation Capital cofounder Jim Anderson; and Doug Jones, who was a senior VP of corporate development at Interwoven when it went public in 1999. Other angels in the space include Marc Andreessen and his partner, Ben Horowitz, who was CEO of OpsWare, which HP acquired last year.
“Early 2005, 2006 — that was a good time to be investing in consumer media,” says Maples.