Angel investors
How should an angel reassess a follow-on opportunity in an AI application startup?
an AI application 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 sells an AI assistant to small support departments. A demonstration works on familiar examples, but the product is still testing performance on new customers' queues. Founder time currently covers many exceptions.
Separate model output from completed customer work. A software revenue claim needs a matching view of model usage, human delivery, customer support, and rework.
A simplified priced-round and cash comparison
Assume a fictional priced equity round of $3,000,000.00 at a pre-money value of $12,000,000.00. A $30,000.00 check divided by the simplified post-money amount produces 0.200% ownership. If a later issuance reduces existing holders by an assumed 22%, that interest becomes 0.156% 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 $600,000.00 of cash divided by $85,000.00 of monthly use gives 7.1 months under a constant-use assumption. Compare the promised workflow with the delivered workflow. The relevant question is whether adoption and delivery economics improve together. 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 | $12,000,000.00 / $3,000,000.00 |
| Fictional investor check | $30,000.00 |
| Simplified initial ownership | 0.200% |
| Assumed later dilution | 22% |
| Ownership without later participation | 0.156% |
| Cash / constant monthly use | $600,000.00 / $85,000.00 |
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
- Who reviews failures?
- How much founder work supports each account?
- Which results hold on unseen examples?
Request a permissioned evaluation sample, customer usage cohorts, an exception log, and a cost model that includes human work. Keep actual results distinct from roadmap features.
A concrete next test
Observe a permissioned workflow where the assistant fails or needs founder intervention. Record the human time and what the customer sees. Compare that case with the demo so the diligence discussion addresses delivered work rather than only the best familiar example.
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 promised workflow with the delivered workflow. The relevant question is whether adoption and delivery economics improve together.
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.