The GP should retain **measured discretion**, with clear guardrails in the LPA.
- **Follow-ons / reserves:** enough flexibility to support winners, defend pro rata, and manage bridge rounds.
- **Post-investment-period investing:** usually permitted for:
- follow-on investments
- protective investments
- closing pre-existing commitments
- **Not ideal:** broad authority to make entirely new platform investments after the main investment period.
- **Best practice:** define:
- reserve policy or broad reserve authority
- concentration limits
- what qualifies as a follow-on or protective investment
- any LPAC / LP approval triggers
The principle: LPs should know the strategy they underwrote, while the GP keeps enough room to manage the portfolio responsibly.
References:
- https://decilehub.com/base/1-general_questions/163813-how-much-flexibility-should-the-lpa-give-the-gp-to-adapt-the-investment-strategy-fund-duration-and-portfolio-construction-for-a-small-specialized-energytech-fund
- https://decilegroup.com/articles/lpa-template-for-vc-funds
- **Follow-ons / reserves:** enough flexibility to support winners, defend pro rata, and manage bridge rounds.
- **Post-investment-period investing:** usually permitted for:
- follow-on investments
- protective investments
- closing pre-existing commitments
- **Not ideal:** broad authority to make entirely new platform investments after the main investment period.
- **Best practice:** define:
- reserve policy or broad reserve authority
- concentration limits
- what qualifies as a follow-on or protective investment
- any LPAC / LP approval triggers
The principle: LPs should know the strategy they underwrote, while the GP keeps enough room to manage the portfolio responsibly.
References:
- https://decilehub.com/base/1-general_questions/163813-how-much-flexibility-should-the-lpa-give-the-gp-to-adapt-the-investment-strategy-fund-duration-and-portfolio-construction-for-a-small-specialized-energytech-fund
- https://decilegroup.com/articles/lpa-template-for-vc-funds