🤝 This week’s edition is sponsored by JETRO

japan is open for business thanks to JETRO.

If you've ever thought "I should really be looking at Japan" and then just… didn't. JETRO Startup is what you've been waiting for.

They connect VCs, CVCs, and angels with Japanese startups, corporate partners, and co-investment opportunities that are hard to find elsewhere. Think warm intros into a market most western investors haven't cracked yet. It's like a startup cheat code.

📰 Today's topic: Why your $5k check matters more than you think

So imagine this: A GP is pitching LPs at a fancy hotel bar. Mid-pitch, one of his portfolio founders walks in. She joins the table for 15 minutes, crushes it, and leaves.

Her company just signed a $20M contract with a tech titan. That client indicated this could expand globally. By end of quarter, bookings might land between $50M and $70M.

This is a company the GP wrote a check into a few weeks earlier. A Tier 1 VC led the seed at a $50M post-money, and he had to beg to squeeze in. (This is a true story by the way.)

So was a tiny check into a deal where the fund couldn't get a meaningful slice worth it?

Yes. Wildly so. And the reason has nothing to do with ownership.

The check is an option, not an investment

When an investor writes a $5k check into a hot deal that's already oversubscribed, they're not really buying equity.

They're buying the right to be on the cap table when the next round opens.

That's the whole game. Because if the company hits, the next round is where investors actually load up. SPV allocation. Maybe pro rata. Maybe a special carve-out the founder gives them because they were good to her when she was nobody.

The first check is the entry ticket. The second check is the trade.

Why this works for small checks too

Plenty of new angels look at a $5k slot into a promising startup and think: what's the point?

But that’s short-sighted. Getting on the cap table means an opportunity to earn trust with the founding team. On top of that, it means getting updates on the company before anyone outside the inner circle.

Moving forward, the founder knows the investor. When she raises the next round, they can ask for allocation. Founders give it to the people who were there early and made themselves useful.

That last one is the unlock.

What to do with a tiny slot

Don't send the wire and disappear. There’s plenty of ways to turn your micro-check into real impact:

• Send relevant intros. Hires, customers, advisors. Real ones, not LinkedIn forwards.

• Offer something specific. SEO, hiring, paid ads, whatever the angel is genuinely good at.

• Stay in touch on the boring weeks, not just when there's an ask.

Do this, and when the founder raises her Series A at $300M, she'll save a slot.

A tiny check into a great company isn't the win. It's the door to the win.

– Brian from Angel Squad

📕 Startup term you should know

Ever heard of Gross Margin?

What's left over after you cover the direct costs of making and delivering your product or service, shown as a percentage of revenue. SaaS companies usually land between 70-85% and the higher you go, the easier it is to scale and flex your pricing power.

My insider scoop: Ben Horowitz says it best: "gross margins are destiny in SaaS—they determine how much you can spend on sales and marketing while remaining profitable." For angel investors, anything under 70% is a red flag, usually meaning the business is tough to scale or seriously underpriced. Hardware-plus-software plays should clear 50%, while pure software should be cruising above 80%.

Overheard in SF…probably

“We don't have competitors because we invented a completely new category: AI-powered blockchain solutions for the metaverse wellness space.”