How much of your firm is riding on one company

The question

How much of the firm's total deployed capital sits in any one company, counting every fund that holds it.

The counting is the whole point. A position that is a reasonable share of Fund II can be a substantial share of the firm once Fund I's original cheque and Fund III's follow-on are added to it. Each fund's own reporting shows a proportionate position. The firm holds something else.

How exposure accumulates across funds

A concentrated firm-level position can be deliberate, or it can emerge from decisions made one fund at a time.

For example, Fund I invests and follows on, then Fund II participates in a later round. Each decision needs its own investment and governance review. The firm-level view adds the deployed capital together so the combined exposure is visible.

This is also why the measurement uses deployed capital, initial cheque plus every follow-on, rather than counting positions. The follow-ons are where the concentration comes from.

Every position above the line is its own flag

There are two lines: one above which a position is surfaced, and a higher one above which it is surfaced more seriously. What matters more than either is how multiple positions are treated.

Each company above the lower line produces its own flag. This is not a single condition that flips once and stays flipped. A firm with one large position and a firm with four are in materially different situations, and a score that treated them the same would be telling both of them the same thing.

Each large position is a separate exposure worth reviewing. The model therefore names each company above its concentration threshold, rather than treating every firm with a flagged position as the same case.

Read differently by lifecycle

The lines sit differently for an emerging firm than for an established one, and deliberately so. Concentration of conviction is structurally appropriate at the Conviction stage: a firm running its first fund with a large position in its best company is doing the thing the stage rewards.

The same distribution at a Continuity-stage firm reads differently, because a firm whose defining claim is durability across partner generations has made a different promise to its LPs about how its capital behaves.

Where this shows up in a live decision

This is the reading behind one of the constraints the Scenario Engine can name as binding. When a follow-on is evaluated and the module reports concentration as the limiting factor, this is the exposure it is reading: not the fund's position in the company, but the firm's, across every fund.

That is the moment the measurement earns its keep. An allocation limited by concentration is not a judgment about the company, and a General Partner who reads it as one will draw the wrong conclusion. The company may be the best in the portfolio. The point is that the proposed allocation reaches the model’s firm-level concentration limit. That is a constraint in the recommendation, not a universal maximum a firm is allowed to own. What actually changes a follow-on decision covers how to read that constraint when it appears.

What this does not read

It reads capital deployed rather than current value. A company that has been marked up substantially represents more of the firm's value than of its deployed capital, and this reading will not show that. The choice is deliberate: deployed capital records the amount invested, while current valuations answer a different question. It is not the same as unrecovered capital or total economic risk.

It also groups by company name as recorded, so a company that appears under different names across funds will read as two smaller exposures rather than one large one. That is worth checking before reading a result that looks better than expected.