Recruiter's Glossary

Examples: ROI • MFN • Ratchet

Follow-on Investment

Term from Venture Capital industry explained for recruiters

Follow-on Investment is when investors put additional money into a company they've already invested in before. Think of it like backing a winning horse twice - if the first investment shows promise, investors might choose to invest more money in later funding rounds. This is common in venture capital and shows confidence in a company's growth. It's different from the initial investment because investors already know the company and its performance. You might also hear this called "follow-up investment," "follow-on funding," or "follow-on rounds."

Examples in Resumes

Managed $50M in Follow-on Investment decisions for our top-performing portfolio companies

Led due diligence process for 12 Follow-on Investment opportunities

Successfully secured Follow-on Investments totaling $30M from existing investors

Typical job title: "Venture Capital Associates"

Also try searching for:

Investment Associate VC Associate Investment Manager Portfolio Manager Investment Analyst Fund Manager Investment Professional

Where to Find Venture Capital Associates

Professional Networks

Job Boards

Industry Events

Example Interview Questions

Senior Level Questions

Q: How do you evaluate whether a portfolio company deserves follow-on investment?

Expected Answer: Looking for comprehensive answer about analyzing company growth metrics, market conditions, initial investment thesis validation, and comparing performance against original projections. Should mention risk assessment and portfolio management strategy.

Q: What factors might make you decide against a follow-on investment in a previously funded company?

Expected Answer: Should discuss missed milestones, changes in market conditions, management issues, competitive threats, or better opportunities elsewhere in the portfolio. Understanding of opportunity cost is important.

Mid Level Questions

Q: What documents would you review when considering a follow-on investment?

Expected Answer: Should mention financial statements, growth metrics, market analysis, competitor updates, and previous investment terms. Understanding of cap tables and term sheets is expected.

Q: How do you structure a follow-on investment differently from an initial investment?

Expected Answer: Should discuss valuation methods, terms and conditions, anti-dilution provisions, and how previous investment terms might affect new investment structure.

Junior Level Questions

Q: What is pro-rata rights in context of follow-on investments?

Expected Answer: Should explain that pro-rata rights allow investors to maintain their ownership percentage in future funding rounds by participating in follow-on investments.

Q: What are the basic metrics you look at when analyzing a follow-on investment opportunity?

Expected Answer: Should mention revenue growth, customer acquisition costs, market size, burn rate, and key performance indicators specific to the company's industry.