Is an emerging fund manager expected by LPs to have 1/3 initial investment 2/3 reserves for follow-ons for breakthrough portcos? Or is an emerging fund manager rather expected to build a platform by maximizing the number of startups (relevant to the thesis) in portfolio with very low reserves for follow-ons?
The allocation strategy between initial investments and reserving capital for follow-ons depends on the fund size and the strategy.
Many, or even most, small Fund 1s don’t have reserves because due to their size.
Many, or even most, small Fund 1s don’t have reserves because due to their size.