Venture Capital No-Reserve Strategy
➡️ Who does it really benefit?
⭐️ The norm vs. the…. mmm not sure yet, let’s see where this goes
Examines traditional VC strategies versus the no-reserve approach.
❤️ Why GPs Love to Sell the No-Reserve Dream
Explores why General Partners advocate this strategy enthusiastically.
🌡 Why LPs Might Bite
Discusses what draws Limited Partners to consider the no-reserve strategy.
🥚 The Harsh Reality of All Eggs in One Basket
Highlights the risks and potential downsides of the no-reserve strategy.
🤑 Startups Get the Short End of the Stick
Analyzes how startups are impacted by the absence of reserved follow-on funding.
🎫 No Proof This is the Golden Ticket
Critically assesses the effectiveness and empirical support of the no-reserve approach.
✅ Straight Talk for Founders
Provides founders with practical advice on evaluating VC strategies.
📢 Main Takeaway
Summarizes the critical perspectives and final thoughts on the no-reserve strategy.
⭐️ The norm vs. the…. mmm not sure yet, let’s see where this goes
The traditional VC method for deploying capital involves stashing cash from the initial fund raise (maybe 30%) for the winning portfolio companies, follow on rounds, ensuring funds are ready for topping up investments during subsequent funding rounds to keep the momentum going and to avoid dilution. Contrarily, the no-reserves strategy is akin to going all-in at a poker game on the first hand—dumping all cash into initial investments and relying on syndicating with LP’s and others for follow on rounds via Special Purpose Vehicles (SPVs).
