# Follow-On Investment

*Startups & Venture Capital — Finicade finance glossary*

A follow-on is additional investment in an existing portfolio company, funded from reserves a fund sets aside for the purpose — often half the fund or more. Getting reserve allocation right matters as much as initial selection, because the power law means concentrating capital into the eventual winners is where returns are made. The failure mode is following money into companies that need it rather than deserve it.

**Also known as:** follow-on, doubling down, reserves

**Related terms:** [Pro Rata Rights](https://finicade.com/glossary/pro-rata-rights), [Power Law](https://finicade.com/glossary/power-law), [Dry Powder](https://finicade.com/glossary/dry-powder), [Venture Capital](https://finicade.com/glossary/venture-capital), [Down Round](https://finicade.com/glossary/down-round)

Source: https://finicade.com/glossary/follow-on-investment