Capital allocation answers a different question from investment criteria. Criteria judge whether a company is worth investing in; allocation judges where, within a given amount of capital, that capital should actually go — a new opportunity that has cleared diligence, an existing holding that needs follow-on funding for its next stage, or reserve held back for a better opportunity not yet identified, or for a temporary need elsewhere in the portfolio.
This judgment is not made once but continuously, as new opportunities emerge, existing companies progress and market conditions shift. It is led by the investment committee, weighing the relative attractiveness of pending opportunities across strategies against existing portfolio concentration and the capital needs of current holdings.
New Investments: 1; Follow-on Capital: 2; Strategic Reserve: 3; Liquidity: 4
Illustrative framework
Comparing & Prioritizing
The first step in allocation is placing capital needs of different origin and character on a common basis for comparison.
Investment Prioritization
When several diligenced opportunities compete for capital at the same time, the investment committee ranks them by risk-adjusted attractiveness, certainty of execution and time sensitivity — not simply the order in which they were submitted.
Opportunity Comparison Across Strategies
Opportunities from different strategies — a technology investment and a long-term corporate holding, for example — must be compared within the same framework, requiring the committee to apply a consistent basis of judgment across different risk profiles and holding horizons.
Risk-Adjusted Decision-Making
Allocation decisions look beyond expected return to the marginal effect a commitment has on the portfolio's overall risk exposure, particularly when the target's industry or geography already carries meaningful weight in the portfolio.
Follow-on Capital for Existing Holdings
Requests for follow-on capital go through review requirements close to those for a new investment — a clear use of proceeds, expected outcome and governance arrangement — rather than automatic approval simply because the company is already in the portfolio.
Discipline & Patience
Once compared, allocation must still hold up against the portfolio's overall discipline and time horizon.
Capital Discipline
The amount of capital available is set by the standing allocation framework, not by the appeal of a single opportunity — even a highly attractive opportunity does not override the agreed pace of deployment or the level of reserve the portfolio is meant to hold.
Concentration Philosophy
The portfolio is deliberately concentrated rather than diversified through a large number of small positions: every investment needs enough capital and attention to support active long-term ownership, and that requirement is itself a constraint on allocation decisions.
Portfolio Balance
Allocation also considers the portfolio's spread across industries, strategies and stages of ownership, avoiding excessive concentration on any single dimension that could weaken resilience through a particular cycle.
Liquidity Considerations
Because investments are held for the long term and lack the ready liquidity of public markets, allocation decisions must reserve an adequate buffer for operating needs and capital already committed for follow-on funding.
Long-Term Horizons
With holding periods typically running five to ten years or more, allocation decisions must consider the pace of deployment across the whole horizon, not just the one-time commitment at closing — follow-on capital is often staged at key points through the holding period.
How the framework operates over time
The four layers are not fixed pools of money but a mechanism under continuous rebalancing. Reserve that looks ample in one quarter can narrow quickly once an existing holding raises a follow-on request; a new opportunity with excellent terms can still be asked to wait, or to scale back, if the liquidity buffer has already dropped below the level the committee has set. These adjustments are made by the investment committee at its regular meetings, with the specific reasoning recorded each time.