Reserve Ratios Are a Bet on Your Own Judgment

• Sahil Harwani
• September 21, 2026
• Blog
• 0 Comments

When a fund launches, it usually decides upfront how much of its total money to set aside – or “reserve” – for investing more in its strongest companies down the line. That number is a genuine, informed guess made before there’s any real evidence to go on. The tricky part isn’t deciding it – it’s finding time, later, to check it against how things actually turned out. That’s exactly the kind of ongoing, evidence-based view CompeteWiser was built to give you.

A fund manager told us his reserve ratio – the amount set aside for future investments in his strongest companies – was 50%, decided when the fund launched. Asked when he’d last checked that number against how things had actually gone, he paused. “Honestly, never. It’s just the number we started with.”

That number wasn’t a random pick – it reflected a genuine, thoughtful guess about how confidently the fund expected to spot future winners. What’s genuinely hard is finding the time, later, to check that guess against real results, because doing that well means pulling together a clear picture of how the whole portfolio has performed – and that’s not something most funds have sitting ready to look at.

Why revisiting this number is easy to put off

Most funds land somewhere around 40-60% for their reserve – decided early, based on assumptions that are, understandably, more educated guesswork than hard data at that point. A year or two later, real evidence exists. But going back and comparing it takes real time most teams don’t have spare, especially when there’s always a new deal in front of you demanding attention today.

There’s also a shift worth knowing about: the typical size of an early funding round has roughly tripled since 2021 – from around $1M to around $3M. So even if your reserve percentage hasn’t changed, what it actually needs to cover has grown substantially. It’s an easy thing to miss simply because nothing forces the question.

And unlike a follow-on decision, which a closing round eventually forces you to face, the reserve ratio just quietly sits in a document from early on. There’s rarely a natural moment that prompts anyone to check it – which is completely understandable, given everything else competing for attention.

What a helpful check-in looks like

• Comparing how your strongest, most-defended companies are actually performing against what you originally expected.
• Reviewing the number on a regular rhythm – at least once a year – against real results and current round sizes.
• Treating “this is what we started with” and “this is still right given what we now know” as two separate, worthwhile questions.
• Updating your math for today’s typical round sizes, not the ones assumed when the fund first launched.

How CompeteWiser helps

This is exactly the kind of clear, ongoing picture CompeteWiser gives a fund. Every company is tracked against what was originally expected of it – so you can see, anytime, how your actual results compare to the reserve plan you started with. A living number you can revisit with real evidence behind it, without needing to carve out extra time to assemble it yourself.

Want to see what this kind of check-in could look like for your fund? Email us at sahil@theprodzen.com.