Does your check size still match your fund size

Start with your current fund assumptions

Bring together the fund size, planned reserves, target number of companies and initial check size you are using today. Check that the figures describe the same version of the plan. A change in one assumption can change what is available for another.

Architecture lets you model one fund free and review how its choices fit together. The model evaluates how a firm is built. It does not predict how a firm will perform.

A fund-design check you can repeat

Put the current assumptions on one page: committed capital, fees and expenses, initial-investment budget, follow-on budget, target company count and average initial check. Keep the cash budget distinct from the model’s simplified configuration checks.

• Reconcile the initial-investment budget with the planned company count and check sizes.
• Change one assumption at a time and record what else would have to change.
• Check ownership targets against the entry valuations and allocations you expect to access.
• Write down the assumptions that still need evidence before presenting the plan to LPs.

Use Architecture’s free fund design to examine those choices together. The walkthrough above shows the workflow; the product link at the end of this article opens the free entry path.

The question

Does the fund’s planned initial check fit the entry stage and ownership it seeks?

After a close, the useful starting point is the capital available under the fund’s terms. Some targets may be adjustable; others require approvals. Review the check size together with those commitments.

The arithmetic

The check available for initial positions is not the fund size. It is what remains after the reserve is set aside, divided across the number of companies the fund intends to back.

In a simplified example before fees and expenses, a $60 million fund holding 40 percent in reserve leaves $36 million for initial positions. Across 30 companies that is $1.2 million each; across 20 it is $1.8 million. The fund size is unchanged, but the average check is 50 percent larger.

VC Lab's guidance to first-time managers adds a correction that quietly matters: check you have not forgotten expenses, because doing so leaves invested capital too high and distorts the returns that follow from it. Management fees and fund expenses come out of committed capital over the fund's life, so the capital genuinely available to invest is smaller than the headline. A fund modelling against its gross size is modelling a check it cannot write.

Why the check has to match the stage

Entry stage provides context for the check size, but actual prices and round roles vary. A smaller check may buy less ownership than planned; a larger one may leave room for fewer companies. Compare the model’s flag with the opportunities and allocations the fund expects to access.

VC Lab frames the same test as a question to ask other people: is it logical that you can get the kind of deals you seek at your check size. The subscore gives you a starting point for that discussion. Actual valuations, allocations and fund terms still need to be checked.

What moves it

Four inputs, and it is worth knowing which ones are still available after a close.

Fund size is governed by the fund’s terms and commitments. Use the current agreed amount.

Reserve share affects the capital left for initial investments. Raising it lowers the implied average initial check, all else equal.

Target portfolio count moves, and moves the check most directly. It is also the input most likely to drift in practice without ever being formally revised.

Target stage sets the context for the check. Review any change against the mandate and required approvals.

What this subscore does not read

It reads the declared configuration, not the checks the fund has actually written. A fund whose realized average check has diverged from its implied check is drifting, and that is visible in the portfolio record rather than here.

It also takes no view on whether the fund is the right size. That question is answered before a close and this subscore is most useful after one.

Sources

• How to Build a VC Fund ModelVC Lab (Decile Group), May 2022, updated September 2024Conceptual rather than arithmetic. Cited for its sanity checks: whether the deals you want are available at your check size, and the warning that unbudgeted expenses leave invested capital overstated.