A fund budget becomes a pace of decisions.
Commitments must cover fund costs, first investments and follow-on reserves. Starting with a planned check size reveals how many complete initial investments the budget supports. This complements reserve allocation, which begins with a target company count and solves for the average check.
The annual table spreads those whole investments across the entered deployment years. Cumulative investments equal the floor of the proportional annual target; later years absorb the indivisible checks. It is a capacity schedule, not a forecast of deals, follow-on timing or capital calls.
The formula, made clear.
- Reserve base
- Investable capital after the lifetime fee and expense budget, not original commitments.
- Whole initial checks
- Only complete checks that fit the initial budget. A fractional company is not created.
- Annual pace
- Initial checks are distributed approximately evenly; reserves stay ring-fenced and undeployed in this schedule.
Put the numbers in context.
A $50,000,000.00 fund with $10,000,000.00 costs and 50% reserves leaves $20,000,000.00 for first checks. At $1,000,000.00 each, 20 initial investments fit: five per year over four years, with $20,000,000.00 reserved for follow-ons.
| Input | Example value |
|---|---|
| Fund commitments | $50,000,000.00 |
| Lifetime fees and fund expenses | $10,000,000.00 |
| Follow-on reserve share of investable capital | 50% |
| Equal initial check size | $1,000,000.00 |
| Initial deployment period | 4 years |
| Whole initial investments supported | 20 |
What this calculation assumes
Static commitment budget, equal initial checks, whole investment counts and a deterministic annual pacing convention. Lifetime costs are reserved up front for budgeting only; no fee payment timing is inferred. No recycling, subscription facility, investment income, follow-on deployment schedule, initial-check variation, successful fundraising assumption or underwriting criterion. Unused initial capital and ring-fenced reserves remain available budget, not forecast cash balances.
Methodology references
What to consider next.
Review reserve per initial company against plausible follow-on checks. Use reserve allocation to work backward from a target company count and portfolio outcomes to test gross investment results.
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