Reserves

Money a VC fund holds back from its total to support existing portfolio companies in later rounds.

Example

A $100M fund investing $40M initially and reserving $60M for follow-ons.

Explains why a fund that loves you may still write a small first cheque — the rest is earmarked for the round after they see you execute.

Follow-on investment — A later investment by an existing investor in a subsequent round.
Venture capital (VC) — Professional investors who manage a fund of other people's money and invest it in high-growth startups in exchange for equity.
Fund — A pool of committed capital with a fixed life — typically ten years — that a VC invests and then returns to its LPs.
Limited partner (LP) — The investors IN a venture fund — pension funds, endowments, family offices, wealthy individuals.

How a VC fund actually works — A VC is not a person with money. They manage a fund with its own investors, and that single fact explains almost everything they do. (15 min)