Industry: Venture Capital
Founded: 2006
Type: Partnership
Size: 1-10 Employees.
The Micro-Cap Approach: Filling a Fundraising Gap
FLOODGATE offers a unique fundraising model that bridges the gap between initial seed money raised from traditional “Angel” investors and the much larger investments that characterize traditional Venture Capitalists.

This fundraising approach is designed to align with the emerging realities of start-up financing:

Lower start-up costs: Low-cost hardware, open-source software, offshore talent, and search engine marketing have collapsed the up-front cost of starting a company and achieving customer validation.

Larger fund sizes: $100 million was once a “mega-fund” in venture capital. That’s no longer the case, as fund sizes routinely pass $500 million and a few even top $1 billion. This makes it hard for most venture firms to justify investing less than $3-5 million in a series A round.

IPOs less likely: In April 2006, the National Venture Capital Association commented that the “venture- backed" IPO market languished while acquisitions market maintained bullish pace in first quarter of 2006.” Even if we see 78 IPOs per year, which were observed on average from 1980-2001, the greater abundance of venture capital means more deals will be funded, which reduces the probability that an individual company will reach liquidity through an IPO.

Flexible Exit Options: Smaller up-front investments create a greater range of exit strategies where everyone wins. For example, 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. 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.

Our Team

Lori Hoover-Simotas
Lori Hoover-Simotas CFO
Ryan Walsh
Ryan Walsh Partner
Melanie Goldstein
Melanie Goldstein Student Advisory Council
Amanda Phillips
Amanda Phillips Executive Assistant / Office Manager