I’ve Changed My Mind. Early Stage Venture Funds of $100 Million or Less Should Hold Almost No Reserves for Follow-On. | Hunter Walk
Early-stage venture funds under $100M should minimize follow-on reserves and instead treat pro rata opportunities as new investments competing for capital allocation.
The venture landscape has fundamentally changed—crowded cap tables, auction-like dynamics, and inexperienced multistage firms make historical "best practices" about reserves outdated and irrelevant.
Funds should maximize initial deployment to catch more outliers, only following on when conviction genuinely exceeds market pricing or when defending exceptional companies.
Fund recycling to 100%+ invested capital solves the reserves question and demonstrates LP discipline without reserving capital upfront.