Venture Capital Fund Reserves

Venture Capital Fund Reserves refer to a portion of a venture capital fund’s committed capital that is set aside to make follow-on investments in existing portfolio companies. Reserves allow VC firms to participate in subsequent funding rounds, protect their ownership stakes, and support startups through additional financial needs such as scaling operations, entering new markets, or navigating unforeseen challenges.

Having adequate reserves is critical in venture investing, as startups often require multiple funding rounds before reaching profitability or an exit event. A typical VC fund might allocate 50–70% of its capital to initial investments, with the remaining 30–50% held as reserves for follow-ons.