Allocation
The specific dollar amount an investor is taking in the round.
Why it matters
Rounds close on confirmed allocations, not on expressed enthusiasm. Tracking who has actually committed a number, versus who is merely interested, is the difference between a forecast and a fantasy.
A worked example
A $4M round might be built from a $2M lead allocation, two $750K follows and a $500K angel syndicate. Until those are confirmed you have interest, not a round.
What is typical
Oversubscribed rounds force you to cut allocations. Deciding in advance which investors you would protect is worth doing before that pleasant problem arrives.
Related terms
Lead investor
The investor who sets the terms, does the deepest diligence and usually takes the largest allocation.
Read more →Follow
An investor who joins a round on terms set by the lead rather than negotiating their own.
Read more →Soft circle
A verbal indication from an investor of a specific amount they intend to invest, subject to conditions.
Read more →Run your raise on this
VCTerminal models these terms on your real cap table, so you can see what a term sheet pays you before you sign it.
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