🤝 This week’s edition is sponsored by Microsoft for Startups

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That’s the value Microsoft for Startups offers: Startup credits, AI tools, developer resources, and actual humans providing actual technical guidance, all aimed at getting you from “it works on my laptop” to “it works for enterprise customers.”

Got backing from a member of the Microsoft for Startups Investor Network? Even better. You may be eligible for an enhanced experience with additional Startup credits, resources, and go-to-market opportunities.

Microsoft for Startups is really saying, “Here, take these tools and build something great.”

📰 Today's topic: 5 questions we send before we wire a dollar

Someone we know got access to a huge late-stage AI round. Massive allocation and a founder whose name you probably know.

Our friend offered us an allocation. We took a look because a lot of angels we know want late-stage exposure alongside the early-stage checks they're already writing.

Our first move was an email with five questions about the structure.

1. What data do investors actually get?

We’re being asked to make an investment decision. On what, exactly?

Sometimes you get revenue, growth, and a real data room. Sometimes you get a one-paragraph blurb and a famous name. Those are wildly different data sets, and you should know what you’re getting before you commit.

2. What happens if the vehicle misses its minimum?

The vehicle needed to raise a minimum of $50M(!) in order to go through. So what if the group our friend recruits only pulls together $25M?

Does the deal still go through at half size? Does 100% of everyone's money come back?

3. If the group above them misses their allocation, does our access evaporate?

Our friend had allocation through a syndicate, which got its allocation from the bank leading the round. If that syndicate doesn't fill its number, does everything below it collapse?

Your funds may sit in limbo for six months and then come back. That lag is not ideal.

4. What's the timeline?

When does the money get called, and when does this actually close?

Knowing you're wiring in three weeks versus three months changes what else you can do with that cash in the meantime.

5. Is the fee negotiable?

Oftentimes syndicate leads will reduce carry for checks over a certain size. Worst case, they say “no.” So we asked. If we decided to go for it, we felt like we could bring enough to the table to get access to lower fees.

Getting into the deal feels like the win. It isn't.

Plenty of people have gotten into great companies through terrible structures and watched the returns get eaten by three layers of carry and insane management fees.

The company is one variable. The vehicle is another one, and it's critical to evaluate both before you wire.

– Brian from Angel Squad

📕 Startup term you should know

Ever heard of Bridge round?

Funding in between the bigger more "formal” rounds. Not automatically a bad sign, even though it sounds like one.

My insider scoop: Bridges aren't always ideal, but they're often the difference between a startup that dies and one that lives to fight another day. The best bridges are offensive, not defensive - growth is real and they want runway to push harder, rather than the round falling apart and them buying time. Same tool, very different bet. Don't ask "is this bad?" Ask "which kind is this?"

Overheard in SF…probably

“We're building the next unicorn in stealth mode. Even we don't know what we're building yet, but it's definitely revolutionary.”