Most firms allocate 60–66% of the fund for “reserves”.

I.e., a $250m fund really means maybe only $100m is earmarked for new investments in new companies.

The rest will be saved to double down on winners, to extend the runway of companies doing OK, and sometimes, to bail out the losers as well.

Opportunity funds and other “double down” vehicles can sometimes change the math slightly, and small funds sometimes have less reserves, but this is the basic model most funds use.

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