Limited partners
What should an LP ask about follow-on reserves at a cross-border venture fund?
a cross-border venture fund: Ask how reserves are sized, allocated, and revisited as evidence changes.
Ask how reserves are sized, allocated, and revisited as evidence changes. A reserve policy can describe discipline without guaranteeing access to later rounds. Clarify how the manager compares supporting existing holdings with making new investments.
Start with the decision
Review the decision criteria, capital model, and examples of follow-on and pass decisions. Test simultaneous demands and adverse scenarios. Ask how conflicts or allocation across related vehicles are handled under the applicable policies.
The illustrative scenario
This is an educational workbook. The company or fund and all numerical inputs below are fictional. They are not ADIN results, customer claims, market benchmarks, or a forecast.
The fictional fund invests in companies operating across two markets. Its strategy relies on local sourcing and expansion support. The LP needs to understand geography, currency, service-provider, and execution dependencies in concrete terms.
Cross-border access introduces questions that a sector label cannot resolve. Do not assume any tax treatment, regulatory permission, currency protection, or enforceability without qualified review.
Reconcile the portfolio plan with its capital budget
This fictional model starts with $50,000,000.00 of commitments and sets aside $8,000,000.00 for modeled lifecycle costs and $18,000,000.00 for follow-ons. That leaves $24,000,000.00 for initial checks. A target of 24 investments at $1,000,000.00 requires $24,000,000.00 before any other unmodeled uses.
The cost amount is a hypothetical budget, not a quoted fee or an industry norm. Actual fees, expense allocation, offsets, fund term, investment authority, and distributions depend on the governing arrangements. A balanced budget does not establish that the manager can obtain the allocations, ownership, or results assumed in the strategy.
Compare the claimed market access with actual examples and responsibilities. Separate a local introduction from demonstrated ability to assess, execute, and support an investment. Reduce the final close or increase the initial check and identify what changes first: company count, reserves, operating resources, or the strategy itself. For this article's question, use the resulting constraint to request the specific evidence or document provision rather than treating the spreadsheet as the decision.
| Item | Illustration |
|---|---|
| Fictional fund commitments | $50,000,000.00 |
| Modeled lifecycle costs | $8,000,000.00 |
| Modeled follow-on reserves | $18,000,000.00 |
| Available for initial checks in this model | $24,000,000.00 |
| Target initial investments / check size | 24 / $1,000,000.00 |
| Initial-investment capital required | $24,000,000.00 |
Use this worksheet
Answer the questions with a source, date, owner, and next action. Mark an unknown as unknown. Use public or permissioned information and involve a qualified specialist when a question requires expertise beyond the team’s competence.
- What qualifies for a follow-on?
- Who makes the decision?
- What access is assumed?
- How are competing demands ranked?
- What happens when reserves are insufficient?
Questions specific to this scenario
- Who verifies local assumptions?
- Which currency is used for reporting?
- What specialist advice is documented?
Request a geographic exposure map, operating roles, relevant local references, currency conventions, and specialist explanations of applicable arrangements. Keep the investment entity distinct from the company's customer locations.
A concrete next test
Choose one proposed investment and map operating locations, investment entities, reporting currency, and local responsibilities. Ask qualified specialists which assumptions need review. Keep sourced evidence of local access separate from unsupported assurances about legal treatment, enforcement, or currency outcomes.
Interpret the result
Reserves create flexibility only within the fund's actual constraints. Avoid treating a fixed reserve percentage as universally optimal or assuming every promising company will receive support on acceptable terms.
Compare the claimed market access with actual examples and responsibilities. Separate a local introduction from demonstrated ability to assess, execute, and support an investment.
Sources and method
These primary resources provide background for the concepts. The fictional scenario, calculations, and worksheet are ADIN educational examples; the sources do not report or validate those invented results. Reviewed October 11, 2026.