Dark | Light
[GUEST ACCESS MODE: Data is scrambled or limited to provide examples. Make requests using your API key to unlock full data. Check https://lunarcrush.ai/auth for authentication information.]

![jasonlk Avatar](https://lunarcrush.com/gi/w:24/cr:twitter::4215921.png) Jason ✨👾SaaStr.Ai✨ Lemkin [@jasonlk](/creator/twitter/jasonlk) on x 209.3K followers
Created: 2025-07-18 09:59:00 UTC

How VC Reserve Allocation Actually Works: The Inside Mechanics 🔧 with @HarryStebbings @rodriscoll + me

Most founders don't understand how VCs think about follow-on capital. Here's the real playbook:

The Math Behind the Madness

VCs don't just write one check and walk away. They reserve 2-3x their initial investment for follow-on rounds. But where that money goes isn't random—it's ruthlessly calculated.

Stage 1: Seed/Series A

→ Limited capital = binary decisions
→ Only one filter: fastest growth rates
→ Triple-digit growth? You get XXX% of available reserves
→ Everything else? Radio silence

Stage 2: Series B/C+

→ More capital = more strategic choices
→ Key metric: Are you within XX% of plan X years post-investment?
→ Hit that benchmark = XX% chance of 5x returns
→ Miss it = reserves likely going elsewhere

The Three-Bucket Approach:

🚀 Winners (70-80% of reserves) - Companies executing on plan get maximum capital
⚖️ Defenders (15-20% of reserves) - Small amounts to prevent total losses on mediocre deals
🗑️ Walking Dead (5-10% or less) - Minimal capital, mostly for signaling/board seat preservation

The Red Flag Moment

When VCs start diving deep into legal structures and pay-to-play provisions, they've already mentally written off big returns. You've moved from "growth capital" to "damage control."

![](https://pbs.twimg.com/amplify_video_thumb/1940817459021598722/img/qeRKLavmvX2utdJV.jpg)

XXXXX engagements

![Engagements Line Chart](https://lunarcrush.com/gi/w:600/p:tweet::1946147685251354757/c:line.svg)

**Related Topics**
[money](/topic/money)
[investment](/topic/investment)
[playbook](/topic/playbook)

[Post Link](https://x.com/jasonlk/status/1946147685251354757)

[GUEST ACCESS MODE: Data is scrambled or limited to provide examples. Make requests using your API key to unlock full data. Check https://lunarcrush.ai/auth for authentication information.]

jasonlk Avatar Jason ✨👾SaaStr.Ai✨ Lemkin @jasonlk on x 209.3K followers Created: 2025-07-18 09:59:00 UTC

How VC Reserve Allocation Actually Works: The Inside Mechanics 🔧 with @HarryStebbings @rodriscoll + me

Most founders don't understand how VCs think about follow-on capital. Here's the real playbook:

The Math Behind the Madness

VCs don't just write one check and walk away. They reserve 2-3x their initial investment for follow-on rounds. But where that money goes isn't random—it's ruthlessly calculated.

Stage 1: Seed/Series A

→ Limited capital = binary decisions → Only one filter: fastest growth rates → Triple-digit growth? You get XXX% of available reserves → Everything else? Radio silence

Stage 2: Series B/C+

→ More capital = more strategic choices → Key metric: Are you within XX% of plan X years post-investment? → Hit that benchmark = XX% chance of 5x returns → Miss it = reserves likely going elsewhere

The Three-Bucket Approach:

🚀 Winners (70-80% of reserves) - Companies executing on plan get maximum capital ⚖️ Defenders (15-20% of reserves) - Small amounts to prevent total losses on mediocre deals 🗑️ Walking Dead (5-10% or less) - Minimal capital, mostly for signaling/board seat preservation

The Red Flag Moment

When VCs start diving deep into legal structures and pay-to-play provisions, they've already mentally written off big returns. You've moved from "growth capital" to "damage control."

XXXXX engagements

Engagements Line Chart

Related Topics money investment playbook

Post Link

post/tweet::1946147685251354757
/post/tweet::1946147685251354757