Why a follow-on model should not tell you what to do

Where the line sits

The Scenario Engine produces a recommendation, an allocation, a timing signal, and a rationale. It does not commit capital, it does not reserve an allocation, and it does not tell anyone at the fund that a decision has been made. A GP can record a decision in Architecture, but any approval, commitment and execution follow the fund’s own process outside the scenario.

That boundary is a design choice rather than a limitation waiting to be lifted. A follow-on decision is a fiduciary act taken on behalf of limited partners, and the reasoning behind it needs an owner who can be asked about it later.

Four things the module does not do

It does not execute. There is no path from a recommendation to a wire, a signed document, or a commitment. The output is a reading.

It does not optimize a portfolio. The module evaluates one company in one proposed round. It does not rank the portfolio, does not distribute a reserve pool across positions, and does not compute an allocation that is optimal in any sense. Running scenarios on eight companies gives you eight independent readings, not a plan.

It does not hold a standing recommendation. Each scenario is a point-in-time evaluation against the inputs as they stood when it ran. A run from March does not update itself in June, and it is not withdrawn when circumstances change. It remains a record of what the evidence supported on the day, which is what makes it useful to look back at and what makes it wrong to treat as current.

It does not evaluate new deals. In its first version the module runs on existing positions only, and only where the position is still live. A company the fund has fully exited or written off does not generate scenarios, because there is no live decision to support.

Why not go further

Comparing one opportunity with the rest of a reserve plan is a broader task. The Scenario Engine does not solve for an optimal allocation across the portfolio.

The scenario uses recorded marks, stage progression, round terms, reserve capacity and exposure. It may not capture last week’s founder conversation, a change in the syndicate, a missed hire or the GP’s assessment of the team. Those details can change the decision, which is why the suggested allocation needs a human review.

The honest version of this instrument makes the part it can see explicit and leaves the rest where it belongs. That is why the rationale exists in the shape it does: the module tells you what it weighed so that you can tell how much of the decision it was actually in a position to inform.

What this means in practice

Use the recommendation as an input to the decision. You may agree or disagree; either way, record the reasons and the information that mattered. The saved scenario preserves the model’s assessment at that time, while your decision record adds the context it could not capture.

The model does not rate the decision afterwards either. There is no scoring of whether a General Partner followed the recommendation, no record of agreement rates, and nothing in the Colibrí Architecture model that reads a firm differently because it disagreed with its own Scenario Engine.