Startup Funding Espresso--Funds Held in Reserve

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

When a Venture Capitalist makes an investment, they place a portion of their allocated investment upfront in the first round and save the rest for a follow-on round.

Most VCs put criteria on the startup’s progress before joining the follow on round. This means the startup must achieve milestones such as revenue generated to get the follow-on funding.

VCs have some of their funds invested in startups, some reserved for follow-on rounds on those startups, and some funds that are available for new startups.

The funds for new startups are referred to as dry powder. This is the number you need to know before pursuing a fund because you could spend your time selling to an investor that has no money to invest.

The last thing an entrepreneur wants to hear from an investor is, “That’s great, we’ll call you when we raise our next round of funding.”


Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.
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