There's obviously pro-rata considerations which I think provide a floor, but beyond that, what other considerations should we be thinking about?
The allocation strategy between initial investments and reserving capital for follow-ons depends on the fund size and the strategy. Many small Fund 1s don’t have reserves due to their size. Beyond pro-rata considerations, factors to consider include the potential for future rounds, the growth trajectory of portfolio companies, market conditions, and the need to support companies through critical milestones. Balancing initial investments with reserves ensures you can support successful companies in subsequent rounds.