Well, hello, and happy Wednesday. Do you have a solar-eclipse strategy yet? (We’re still working on ours.)
Top News in the A.M.
The most-liked tweet in history was published last night.
Top CEOs who were members of Donald Trump’s Strategic and Policy Forum just agreed to disband the group, following his comments yesterday that “both sides” were responsible for the violence initiated by neo-Nazis and white supremacists in Virginia this past weekend. The policy group had included IBM CEO Ginni Rometty, JPMorgan Chase CEO Jamie Dimon, and GM CEO Mary Barra among a dozen others. “There really was nothing to debate,” one member told CNBC. More here.
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Mike Maples on How to Raise a Fund in Today’s Climate
By Semil Shah
Mike Maples founded the early-stage firm Floodgate roughly a decade ago and it’s fair to say that things have gone pretty well for him since. His bets include Twitter, Twitch.TV, Bazaarvoice, Spiceworks, Demandforce, and Okta. He’s been on the Midas List. And Maples was involved as a founder and operating executive at Tivoli Systems, acquired by IBM after going public, and Motive, acquired by Alcatel-Lucent after going public. (The firm has also benefited from an early bet on Lyft made by Ann Miura-Ko, who joined Maples a year later as cofounder.)
When Maples raised his first, $15 million, fund, it took just one month, and most of the capital came from one individual investor — though he lined up six altogether. We talked with him recently about that fund, as well as what aspiring fund managers need to keep in mind today. Our chat has been edited for length.
You raised your first fund fairly easily, based on your operating background.
I always had a pretty realistic view of the purpose of Fund 1. I saw it as a booster rocket for the future. Either it would propel Floodgate to escape velocity, or it would flame out quickly. Many first-time fund managers have a target to raise and they go out and try to raise it. In general, I disagree with this approach. Instead, I looked at my fund size as “that which I can raise from the true believers in 30 days or less.” My view was that if someone wanted to invest in my fund, they already had decided for the most part. So . . . rather than say “I’m raising $25 million” or $50 million or whatever, I took the perspective of: I am new at this. I might lose money. I might not like managing a fund. You might not like how I manage a fund. What is an amount you would consider investing, given these realities?
If you don’t have a set of people who already believe, I hate to be the bearer of bad news: You are likely not ready to raise a fund.
When did you start talking with more traditional LPs, and how did you approach them?
I started building these relationships before I closed Fund 1 but did not pitch any of the more traditional LPs [for Floodgate’s second fund]. My view was that it was important to get to know LPs when I was not fundraising. It was more straightforward to have honest conversations and not try to sell around objections or try to out-guess what people were looking for.
One of the unanticipated benefits of this was that I really got to understand how some of the best LPs thought about investing in the very best firms. I could get data and insights about the types of portfolios that produced the winning returns and the best practices of building great teams and funding great founders.
You should never be in sell mode with a potential LP. You should . . . use the meeting as an opportunity to test your ideas and improve them. When you have the chance to meet with a new potential LP and you are not in sell mode and you get an objection about your strategy, you can say, “Interesting. Tell me more about that.” If the LP is right because they have more perspective or data, you’ll get better and smarter. If you disagree on a first-principles basis after receiving the feedback, you’ve dodged a bullet because you have different values. When your investors have different values than you, it’s a miserable existence.
Anything else you can tell folks who are out there in today’s market, trying to raise a fund?
First, you are not for everybody. Some people will see your advantage and value your advantage. Most will not. Just like a startup raising money, your early customers — in this case, LPs — are not the mainstream. They are the people who believe what you believe. Your task is to find these people. If most don’t believe what you believe, then that’s OK. Come back to them when they do.
Second, don’t try to outguess what people are looking for. Ask yourself honestly why you’re raising a fund and in what ways you’re going to be awesome in a crowded world of way too many VC dollars. You need a crystal clear answer to this, especially as a first-time fund manager, including to justify the use of your own time. A lot of people enjoy investing in startups and would like more money to invest in more. LPs don’t care about your desire to fund startups; they care about your unique strategy to get paid for the risk you take.
Third, turn off your happy ears. By the time you have decided to raise money, most of the people who will invest have already decided. If they are not willing to declare their commitment quickly, they are not ready. If the sum of the money of committed investors who believe in you right now does not add up to a fund, then you are either raising money too soon or trying to raise too much. Accept this, as well as the fact that if you are awesome, there will always be another chance down the road. But failure mode is pressuring and rushing people.
3Bar Biologics, a four-year-old, Columbus, Oh.-based company that uses living microbes to stimulate plant growth (its product is applied to seeds), has raised $2 million in funding, including from Rev1 Ventures, Maumee Ventures, Ohio TechAngel Funds, Queen City Angels, Carmen Innovations, and SVG Thrive Fund. More here.
Actionable Quality Assurance, a 3.5-year-old, Gainesville, Fla.-based software as a service platform for thorough monitoring of food safety for restaurants, has raised $2 million in seed funding from a private angel investment group. More here.
GeoTix, a two-year-old, Traverse City, Mi.-based ticketing platform that aims to help local and regional media companies grow their revenue, has raised $1 million in funding, including from Boomerang-Catapult and Casey Cowell, a co-founder of U.S. Robotics. More here.
HiScene, a five-year-old, Beijing-based startup that’s developing hardware and software products for augmented reality, has raised roughly $14 million in Series B funding led by Shanghai Cableway Investment, with participation from Sincere Capital, Vstar Capital and the Chinese smartphone and selfie app developer Meitu. China Money Network has more here.
ilos Videos, a two-year-old, St. Paul, Mn.-based provider of a video platform for the workplace, has raised $1.5 million in seed funding led by Active Capital, with participation from Ingram Content Group and Hyde Park Venture Partners. The company has now raised $3 million altogether. More here.
Kingo, a four-year-old, Ciudad de Guatemala, Guatemala-based solar energy technology company, has raised $8 million in Series B funding led by FCP (the innovation fund of Colombian utility EPM), ENGIE (a French utility), FMO (a Dutch development bank), Proparco (a French development bank), and H-Reff(a renewable energy fund). The company has now raised $19 million altogether. FinSMEs has more here.
Lift, a three-year-old, Toronto-based startup that helps customers find cannabis clinics and book appointments with them, has raised $3 million in Series A funding from undisclosed backers. More here.
MedAware, a five-year-old, Raanana, Israel-based company whose software performs real-time evaluations of prescribed drugs against up-to-date patient profiles to eliminate prescription errors, has raised $8 million in Series A funding. Backers included BD (Becton, Dickinson and Company), Gefen Capital, OurCrowd and Yingcheng City Fubon Technology. More here.
Options, a 23-year-old, New York-based provider of cloud-enabled managed services to the global capital markets, has raised roughly $100 million in growth funding from Bregal Sagemount, a New York-based private equity firm. More here.
Phil, a two-year-old, San Francisco-based, end-to-end prescription management and delivery service that connects patients with local pharmacies, has raised $10 million in funding led by Crosslink Capital. Other participants in the round include Eniac Ventures, Softtech VC, Forerunner Ventures, SV Angel, Silicon Valley Bank, and Transmedia Capital. More here.
Respond Software, a year-old, Mountain View, Ca.-based expert system that says it emulates the decision-making and judgement of a seasoned security analyst, has raised $12 million in Series A funding led by CRV and Foundation Capital. More here.
SnapApp, a six-year-old, Boston-based SaaS platform used by B2B marketers to create, publish, and measure interactive content, has raised $10.2 million in Series B funding, including from Providence Strategic Growth, the growth equity affiliate of Providence Equity Partners. Xconomy has more here.
YangTian, a two-year-old, Tianjin, China-based developer of light industrial robotic arms that are used for a variety of jobs like handling, assembling, polishing, and coating, has raised $7 million in “pre-A” funding from Lenovo Capital and the Incubator Group. GSR Ventures and Yinxinggu Capital also joined the round. China Money Network has more here.
645 Ventures, a four-year-old, New York-based, seed-stage venture firm, is looking to raise up to $30 million for its second fund, according to an SEC filing. The company was cofounded by Nnamdi Okike, a former principal at Insight Venture Partners, and Aaron Holiday, a former associate at DFJ Gotham Ventures and former entrepreneurial officer at Cornell Tech.
Andrew Ng, the cofounder of Coursera and formerly Baidu’s chief scientist, is looking to raise up to $150 million for a new vehicle called The AI Fund. TechCrunch has more here.
Round13 Capital, a six-year-old, Toronto-based tech-focused venture capital firm, has closed on $95 million in commitments for its newest fund, from backers that include high-net-worth individuals, family offices, National Bank, and the pension fund LiUNA. The firm funds growth-stage Canadian companies. More here.
Despegar, an 18-year-old, Buenos Aires-based online travel company, yesterday filed to raise up to $100 million in an IPO on the NYSE. The company, a rare “unicorn” in Latin America, is owned in part by Tiger Global Management, which has been investing actively in Brazilian startups for years. Other shareholders include Expedia, General Atlantic, Sequoia Capital, Insight Venture Partners and Accel Partners. Reuters has the story here.
MongoDB, a 10-year-old, New York-based database startup that has raised more than $300 million from VCs, has confidentially filed to go public, says TechCrunch. At the time of its last private valuation in 2015, MongoDB was reportedly a $1.6 billion company. More here.
Netsertive, a Morrisville, N.C.-based marketing technology company, has acquired Mixpo, a Seattle-based video advertising software company. Financial terms weren’t disclosed. Mixpo had raised more than $10 million in funding from investors, including GrowthWorks Capital, Madrona Venture Group, and Yaletown Partners. Netsertive has raised roughly $38 million, including from RRE Ventures, Babson Capital Management, Harbert Venture Partnersand Greycroft Partners. GeekWire has more here.
Shelby Bonnie, the cofounder of CNet and more recently spent four years as a managing director with Allen & Co., is newly the CEO of Pylon, an artificial intelligence cmpany that’s building custom experiences for Amazon Echo and Google Home. Business Insider has more here.
Nicole Sanchez, co-founder and CEO of Credit Hero, has joined female founder-focused seed fund XFactor Ventures. More here.
According to Facebook, 45 million people send birthday wishes on its platform each day. It just equipped them with some new features, too.
According to a poll by the public relations firm Weber Shandwick, roughly half of millennials believe CEOs “have a responsibility to speak up on issues important to society”— compared to just 28 percent of Gen Xers and Baby Boomers. (H/T: Fortune’s Alan Murray.)
Uber is in talks to raise as much as $12 billion, according to Bloomberg. Approximately $1 billion to $1.5 billion would be used to acquire new shares, and anywhere from $2 billion to $10 billion would be used to buy out the shares of existing shareholders.
Apple is budgeting $1 billion to procure and produce original content over the next year, says the WSJ, a sign of how serious it is about making a splash in Hollywood.
Why Benchmark may want to cash out of Uber, in Dealbook.
Waymo may get an edge over rival Uber as the two head into an explosive trade secrets trial this fall. Today, a federal judge said he’ll likely tell the jury about how Uber’s lawyers “misled the court” and repeatedly failed to produce documents that could be important in the case. The SJ Merc has more here.
Millennials like vintage, but they haven’t inherited a love of antiques.
Jimmy Kimmel’s not-terrible idea to make Donald Trump king.
It’s always a Florida man.
Solar eclipse camps. (Hey, it’s one option.)