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— Burn Rate —
Maples argues that the same forces that have made it less expensive than ever to launch an Internet company -- open-source software, off-shore labor, search engine marketing, user-generated content, community contributions, low-cost hardware and broadband penetration -- are also drastically lowering the costs of starting a business software and service play. "A lot of the high-profile investing of small money has been in consumer Internet," he says. "But what I call 'low-burn experimentation' spans all technology. I believe low-burn experimentation is going to be a very disruptive force in business software and services."
Among the business software startups his Silicon Valley venture capital firm, Maples Investments, backed over the last year is Hyper9 Inc. (formerly InovaWave Inc.) an Austin, Texas, maker of software that uses a search engine to access information involved in managing virtual computer systems. Hyper9 also has raised $9 million from investors including Matrix Partners and Silverton Partners, which is the investment and philanthropic organization of former Austin Ventures partner Bill Wood. In July, Maples also invested an undisclosed amount in Egnyte Inc., which provides on-demand file-servers for small businesses, while another company in his portfolio is DemandForce, which makes a Web-based customer relationship management system aimed at small businesses. Maples, 40, began his career as an entrepreneur focused on business software and services, with early stints at high-speed computing specialist Silicon Graphics Inc. and client-server software vendor Tivoli Systems Inc., which IBM Corp. acquired in 1996 for $743 million. In 1997, he co-founded Motive Inc., a publicly held broadband software company Alcatel-Lucent SA purchased in June for roughly $68 million. In fact, Maples' technology career goes back even further. He started his first company in high school, making software and games for the original IBM PC. The interest in high tech may well be in the genes. His father is Mike Maples Sr., a well-known executive who worked for years at IBM and retired from Microsoft Corp. as executive vice president of the worldwide products group and who still acts as a consultant to Microsoft and other companies. After leaving Motive in 2004, Maples collaborated with VC firms Foundation Capital and August Capital, both of Menlo Park, Calif. "In that process, I became interested in the gap in the venture business between angel investors on the one hand, who typically don't invest more than $250,000, and VCs, who typically don't invest less than $5 million," he says. Maples began making angel investments in 2005. One of his earliest deals as a seed investor was with podcaster Odeo Inc. Although the company failed, it gave Maples a chance to invest early in Odeo founder Evan Williams' next venture, which turned out to be ballyhooed "microblogging" startup Twitter Inc. of San Francisco. Other Web 2.0 companies Maples has backed include social voting startup Digg Inc., discovery player Aggregate Knowledge and video advertising developer YuMe Inc. "Some of those companies started to do well, and it was exciting, and a lot of people suggested that I raise my own fund," Maples says. To that end, Maples Investments closed a $10 million fund in 2006 and this year raised a $36 million vehicle. These days, all of Maples' investments are done through the firm, with deals ranging from $500,000 to $1.5 million per company. Maples sees today's business software startups facing the same issues consumer Internet firms did a few years ago. "In the early days of Digg, we asked, 'How can we double our user base every four weeks without spending money on marketing?' Egnyte and Demandforce are asking the same questions today for business software and services." Comments |
For noted angel investor Mike Maples Jr., lessons learned from backing Web startups are excellent guides for 
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Egnyte is another great company Maples Investments is involved in.
http://www.egnyte.com/