I've sat on both sides of the table. As a founder, I was often in the dark. As an angel investor, I learned the unwritten rules of the game. I'm pulling back the curtain on follow-on investing and revealing what investors are really thinking when they send you that document.
The Counterintuitive Truth
In follow-on investing, the best practitioners often do less, not more.
The lesson: most founders overthink this and underspend on execution. It sounds simple. It's incredibly hard to execute.
What I've Learned From 131 Companies
A few patterns in follow-on investing come up again and again.
The founders who handle follow-on investing well understand that the market doesn't care about your roadmap.
The Reality Nobody Talks About
A lot of the advice on follow-on investing rests on assumptions that made sense five years ago. The world has moved on.
The first thing to understand is that you need to move fast and break things. I've seen this play out across dozens of companies. The pattern is unmistakable.
Many teams spend months on the wrong path before realizing that the best solutions are often the simplest ones. Once they make the switch, everything changes.
What I Tell Founders
Before deciding anything about follow-on investing, start with three questions:
What's your timeline? Because the right approach for a company with 6 months of runway is very different from one with 3 years.
What have you already tried? Most founders have tried something. Understanding what didn't work is often more valuable than knowing what might.
Who on your team owns this? If the answer is "everyone" or "no one," that's your first problem to solve.
These questions seem simple but they reveal a lot about where a company actually stands.
This connects to broader themes around follow-on investing, syndicate investing, dilution, secondary markets, portfolio construction that I've been thinking about a lot lately.
The Bottom Line
None of this is rocket science. But it does require intentionality, consistency, and a willingness to learn from mistakes.
If you take one thing from this article, let it be this: start now, start small, and iterate. The founders who win at follow-on investing aren't the ones with the best strategy on paper. They're the ones who execute, learn, and adapt faster than everyone else.
Companies that take follow-on investing seriously tend to pull ahead of the ones that don't.
If you're working on something interesting in this space, I'd love to hear about it. Drop me a line.
Frequently Asked Questions
Q:What's the most common pushback you get on this?
People often push back by citing exceptions or edge cases. And they're usually right that exceptions exist. But building a strategy around exceptions rather than patterns is a losing game for most founders.
Q:What experience informs this perspective?
This perspective comes from over a decade of building companies in Silicon Valley, two successful exits (RemoteTeam to Gusto, MovieLaLa to Gfycat), and investing in 234 startups including Anthropic, OpenAI, and Scale AI. I write about what I've lived.
Q:How can I apply this thinking to my own situation?
Start by identifying the core principle behind the opinion, not the specific example. Then ask yourself: does this principle apply to my context? If yes, test it in a small, low-risk way before going all in.