Angel investors
How should an angel reassess a follow-on opportunity in a deep tech startup?
a deep tech startup: Reassess a follow-on using the evidence and terms available now.
Reassess a follow-on using the evidence and terms available now. The original investment decision is context, not a reason to ignore changes. Compare the company's progress, cash needs, price, rights, and alternatives with the assumptions behind the first check.
Start with the decision
Write a changed-evidence memo before deciding. Separate new facts from a desire to defend the earlier investment. Identify what participation would change in exposure and what information remains unavailable.
The illustrative scenario
This is an educational workbook. The company or fund and all numerical inputs below are fictional. They are not ADIN results, customer claims, market benchmarks, or a forecast.
The fictional team is developing a sensing component with a laboratory prototype. Commercial customers require validation outside the lab before a design win. Manufacturing and qualification milestones compete for the same runway.
A successful laboratory test does not establish production reliability or buyer adoption. Keep technical feasibility, manufacturability, customer qualification, and commercial commitment separate.
A simplified priced-round and cash comparison
Assume a fictional priced equity round of $5,000,000.00 at a pre-money value of $20,000,000.00. A $50,000.00 check divided by the simplified post-money amount produces 0.200% ownership. If a later issuance reduces existing holders by an assumed 24%, that interest becomes 0.152% without participation.
The exercise omits option pools, convertibles, preferences, fees, side agreements, and other actual terms. It is not a SAFE conversion model or a recommendation to invest or preserve ownership. Actual cap-table and document analysis belongs with qualified advisers. A percentage of ownership does not specify eventual proceeds or protect against total loss.
The fictional company's $1,500,000.00 of cash divided by $140,000.00 of monthly use gives 10.7 months under a constant-use assumption. Compare the next financing milestone with the resources and dependencies needed to reach it. Use qualified technical reviewers for claims outside the investor's expertise. Connect that simple quotient to dated obligations and milestones before drawing a conclusion about financing needs or progress.
| Item | Illustration |
|---|---|
| Assumed pre-money value / round size | $20,000,000.00 / $5,000,000.00 |
| Fictional investor check | $50,000.00 |
| Simplified initial ownership | 0.200% |
| Assumed later dilution | 24% |
| Ownership without later participation | 0.152% |
| Cash / constant monthly use | $1,500,000.00 / $140,000.00 |
Use this worksheet
Answer the questions with a source, date, owner, and next action. Mark an unknown as unknown. Use public or permissioned information and involve a qualified specialist when a question requires expertise beyond the team’s competence.
- What changed since the first check?
- Which milestone was reached?
- What terms are offered?
- What assumption failed?
- What alternatives exist?
Questions specific to this scenario
- What test can be reproduced?
- Which milestone depends on a third party?
- What changes between prototype and production?
Request dated test protocols, repeatability results, independent technical references, and a milestone budget. Distinguish a customer's evaluation agreement from an order.
A concrete next test
Ask a qualified technical reviewer to identify a repeatable test that distinguishes laboratory feasibility from the next commercial milestone. Record the equipment, conditions, dependencies, and evidence needed. A dramatic demonstration should not substitute for the specified validation process.
Interpret the result
A useful memo can support participation, a pass, or more inquiry. It should make the reasoning visible without implying that following prior winners or supporting struggling holdings is universally correct.
Compare the next financing milestone with the resources and dependencies needed to reach it. Use qualified technical reviewers for claims outside the investor's expertise.
Sources and method
These primary resources provide background for the concepts. The fictional scenario, calculations, and worksheet are ADIN educational examples; the sources do not report or validate those invented results. Reviewed October 11, 2026.