📕 Startup term you should know

Ever heard of Rule of 40?

Think of it as a vibe check for SaaS companies. Add your revenue growth rate and profit margin together, and if you hit 40% or higher, congrats, you're cooking. It basically asks: are you growing fast enough to justify how unprofitable you are (or vice versa)?

Example: 30% growth + 15% profit margin = 45%. You're in the club. ✅

My insider scoop: Bessemer's Rule of 40 originated as a public market valuation tool but now drives private market expectations. For angel investors, early-stage companies should prioritize growth over profitability, but mature startups (Series B+) should target Rule of 40 compliance. Mary Meeker notes that "high-growth companies can achieve Rule of 40 scores above 60% but may sacrifice long-term market position."

📰 Today's topic: How to Ask a Founder for Allocation ... Like a Normal Human

Stop overthinking it. Just ask.

I see this constantly with new angel investors. They want into a deal, but instead of being direct, they play this weird dance.

They drop hints. Send cryptic LinkedIn messages. Wait for the founder to magically read their mind.

Here's the thing: founders are busy building companies. They don't have time for subtlety.

Want in? Ask.

The straightforward approach that actually works

Let's say you want to invest in Sarah's startup. Here's what you do:

"Hey Sarah, I love what you're building with [specific thing about their company]. Would you be open to a $5K investment from me?"

That's it. Direct, clear, specific.

Then explain why you're excited. Not generic stuff like "great market opportunity" but real specifics:

- "Your customer acquisition cost is insanely good"

- "I've seen this exact problem kill three companies I worked with"

- "Your approach to [specific feature] is brilliant"

People can smell genuine excitement from a mile away. And founders want investors who actually get what they're doing. Then close the loop: "I'd love to be part of this with $5K."

Simple. Effective. No games.

Show, don't just tell

Sometimes founders are swamped with interest or on the fence about new investors. That's when you shift from asking to proving.

The secret weapon? Add value before you invest a single dollar.

If they're hiring, send them 3 great candidates. If they're struggling with pricing, share a framework that worked for another company. If they're launching on Product Hunt, offer to rally your network.

These aren't massive favors, but they show something crucial: you're not just another check writer.

One founder told me: "I had 50 people wanting to invest. But only 3 actually helped me solve problems before asking for anything. Guess who got allocation?"

What absolutely doesn't work

Pretty please with sugar on top, don't try these moves:

• The guilt trip: "I've been supporting you since day one, you owe me this"

• The FOMO play: "This is your last chance to get my money"

• The threat: "If you don't take my check, I'll tell everyone to avoid this deal"

Yes, people actually do this stuff. And yes, it instantly kills your reputation in the founder community.

Founders talk, and word spreads fast about investors who act like jerks.

The reality check

If you're asking yourself whether a founder would want to work with you for the next 7-10 years, you're on the right track.

The best investors I know don't need leverage or manipulation. They make a clear ask, show genuine value, and let the founder decide.

Sometimes you get in. Sometimes you don't. But you always preserve the relationship for next time.

Because here's what most people miss: that founder you couldn't invest in today? They might start another company in 3 years. Or refer you to their co-founder who's raising. Or become a scout for the fund you want to join.

Be direct. Be helpful. Be someone they'd want as a partner. Everything else is just noise.

– Brian from Angel Squad

🍫 A snack for the road: You’re invited to Camp Hustle!

Camp Hustle is not your typical investor conference and that's entirely the point.

Hosted by Hustle Fund, Camp Hustle is a three-day immersive retreat designed for emerging fund managers, angel investors, family offices, and ecosystem builders. It’s built for startup investors who crave authenticity, meaningful connection, and a damn good time.

Set in a relaxed, camp-inspired setting (no tents) nestled among the redwoods of Northern California, Camp Hustle invites attendees to build connections, not rolodexes. Because when you focus on building strong relationships, great business opportunities emerge.

Overheard in SF…probably

“We don't need a business model. Amazon didn't make profit for 20 years, and look at them now. We're following the Bezos playbook.”