Ajo Angels Weekly Pulse

A company spends $50 to acquire a customer who pays $100 back. That's a nice 2x return.

That sounds exciting, but if you see this you should be nervous.

Unit economics is simply about how much money a company makes on each customer.

It's the math between two numbers:

Example: A company spends $50 on ads to get a customer. The customer buys once for $30 then never comes back. In this case, the unit economics are broken because the company loses money on every sale. This means the business will never be profitable.

Same $50 on ads, but the customer pays $200 over their lifetime through repeat purchases. Unit economics works because the company profits $150 per customer.

Why this matters for you: If the company loses money on each customer, scaling just means losing money faster. Your investment helps them dig a deeper hole.

If they make money on each customer, growth works. This is the foundation your investment is built on.

That company with $50 CAC and $100 LTV sounds fine until you realize customer acquisition costs almost always go up.

Early customers are cheap. They come from the founder's network or referrals. Then the company tries to grow and now they're competing against companies with big budgets, hiring salespeople, paying premium rates for ads.

Six months later that $50 CAC is $80. A year later it's $120. If the business only works at $50 CAC, you just invested in something that's already on its way to going down hill.

If a company shows you $50 CAC and $100 LTV and feels good about it, but you should be asking lots of questions.

What happens when CAC hits $100, $200 or even $300? Will the business model still work or does it collapse? If it collapses, you're not investing in a sustainable business. 

You see headlines about startups that raised $200 million and then closed down. When you dig into what happened, it's usually the same story, the unit economics never made sense from the beginning.

What has usually happened in these cases is that the companies were spending money slower than they could make money or raise money. And eventually they ran out of cash.

Look for companies that make their money back in the first transaction. Example..they spend $50 on marketing, $30 on product costs and the customer pays $100. That's a $20 profit immediately, before you even the repeat purchases.

Not "we break even in 12 months." Not "we'll be profitable eventually." Profitable right now, from day one. That gives them cushion when CAC goes up.

Decent unit economics is a tightrope walk that most companies can't pull off so stay away from them.

Don't just verify that the math works today. Ask whether it can survive CAC doubling or tripling. Ask what happens when growth gets expensive and competitive.

The companies worth backing aren't the ones that need everything to go perfectly. They're the ones with fundamentals strong enough to take hits and keep working. And those are the companies you should invest in.

Billseye is a app that helps lawyers, consultants, and other hourly professionals track, time, and get paid for their phone calls. It makes sure no billable minute gets lost.

Summary: Billseye helps professionals eliminate losses from unbilled calls. The app tracks calls, calculates billable time, documents key details, and connects with payment systems. It also allows preauthorized payments, so clients can pay quickly and easily.

The Backstory: The founder, Alcide Honoré, is an attorney who saw how much money professionals were losing from phone calls that were never billed. Many people forget to start timers, write down notes later, or send invoices days after the work is done. Billseye was created to fix this problem by making billing automatic and simple.

Key Innovation: Billseye turns every client phone call into a billable event with just one tap. Users press a button when answering a call, and the app tracks time, calculates charges, and sends payment links.

Funding: Rasing $100,000 and is projecting strong growth over the next 36 months.

Black Americans drive over $1.6 trillion in annual buying power, much of it spent through tech platforms like Amazon, Uber, Apple, and streaming apps, yet own very little equity in those same companies?

Cheers,

Abdul

Hey Hey… I’m Abdul I’m the chairman of Ajo Angels and Shujaa Capital and I’m on a mission to introduce angel investing to 25,000 black folks over the next five years. I’m doing this with the goal of narrowing the racial wealth gap as well as trying to close the billion dollar funding gap for black founders.

This information is for educational purposes only and should not be construed as financial advice. Angel investing involves substantial risk, including the risk of total loss. Consult with a qualified financial advisor and attorney before making investment decisions.