Individual investor Mike Maples, an early and well-known proponent of consumer Web 2.0 startups, believes the enthusiasm over Web 2.0 is waning.
Maples, who previously worked at Foundation Capital and August Capital before starting his own firm, said he has switched his primary focus to investing in business software and services. “How many social networks are people going to sign up for?” says Maples of the crowded Web 2.0 landscape.
The shift is certain to draw attention. Maples, who co-founded 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—he estimates that Maples Investments has made between 15 to 20 investments—are the social news site Digg, microblogging company Twitter and the Internet advertising and marketing services provider YuMe.
Though Maples has yet to see any exits, just on the promise of the startups he has backed so far, he was able to raise $33 million for his second fund this spring, including raising commitments from Horsley Bridge, The University of Chicago and Weathergage Venture Capital.
Today, he is investing that fund, Maples Investments II, with Associate Ann Miura-Ko, a former analyst at Charles River Ventures and McKinsey and Co. The two are spending “75% of our time” looking at companies that have nothing to do with the consumer Web.
Among Maples’ recent investments are in Egnyte, SpiceWorks and DemandForce, each of which is focusing on small businesses. Sunnyvale, Calif.-based Egnyte makes Web-based software that lets its customers securely upload files to its computers, where they’d made available to their colleagues. SpiceWorks, an Austin-based startup, offers companies a free networking monitoring tool against which it’s hoping to sell advertising. DemandForce’s software suite helps dental offices manage communications with their customers. Maples says that denistry is the first of what the San Francisco-based company hopes will be many service “verticals.”
Maples—who says that most of the consumer-oriented Web 2.0 companies he sees are based on derivative ideas—began looking into business software and service companies about a year ago. Maples typically commits up to $500,000 in each startup he backs.
“When a sector has a lot of VCs in it, it’s dangerous to be a lightweight capital provider,” he says. “You just get overwhelmed by the amount of money out there.” —Constance Loizos