Funds Held in Reserve

Funds Held in Reserve

June 18, 2020 by investor

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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Copyright (c) 2020, Hall Martin and All rights reserved.

Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit dedicated to the education of investors for early-stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon for the basis of investment decisions.