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Venture Capital
~90s
Portfolio Construction & VC Returns
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Follow-On Strategy
Fund Economics
Why do VC funds typically reserve capital for follow-on rounds?
A
To maintain ownership and increase exposure to breakout winners in later rounds
B
To guarantee the fund can control every portfolio company
C
Because follow-ons always have higher IRRs than initial checks
D
To reduce management fees by keeping capital uninvested
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