What actually changes a follow-on decision

Three elements, every time

Each scenario returns three parts: a positive signal, a negative signal and a binding constraint. When information is incomplete, the rationale identifies the gap. When there is no meaningful signal on one side, it says so rather than inventing an argument.

The consistent structure makes scenarios easier to compare. It shows what supports the suggestion, what works against it and what limits the allocation, without implying that these are the only considerations in the real decision.

The strongest signal in favour, and the strongest against

The first two elements name what is pulling hardest in each direction in the evidence about this company. They are drawn from the same reading that produced the recommendation, so they are not commentary added afterwards; they are the parts of the picture that moved it most.

A yes with a named signal against it is more useful than a yes on its own, because the named signal is the thing to go and check. If the strongest argument against following on is something a General Partner already knows to be stale, or already has private context on, the recommendation should be read differently. That is the whole purpose of surfacing it.

When the evidence genuinely runs one way, an element can report that there is nothing meaningful on that side. That is an honest output rather than a gap, and it is a stronger statement than a weak counter-argument dressed up to fill the slot.

The binding constraint

The third element identifies what limits the suggested allocation within the model. It can report one of four outcomes.

• Reserves

  The fund does not have the remaining follow-on capacity to fund the allocation the evidence would otherwise support.

• Concentration

  The firm's existing exposure to this company, counted across every fund it runs, is what limits the number.

• Timing

  The round's position relative to what is about to become knowable is the limiting factor rather than money.

• None

  No modeled constraint is binding. Other legal, commercial or practical limits may still affect the decision.

The constraint points to the next question. For reserves, review the remaining budget and obligations; recycling is an option only where the fund’s terms permit it and proceeds are available. For concentration, review the firm’s combined exposure. For timing, examine the event or terms that could change the assessment. Several real-world constraints can matter even when one is binding in the model.

Two funds can receive the same allocation for the same company with entirely different constraints binding, and they are in entirely different situations. Reading the number without the constraint loses that completely.

How to use it

A useful place to start is the binding constraint. Then check the positive and negative signals against what you know about the company and round. Is any input stale? Is there information missing? What would change your decision?

The rationale should help a GP examine the suggestion, including reasons to disagree. The GP remains responsible for the decision. Recording the reasons for it makes a later review more useful than a simple record of agreement or disagreement.