# Allocations

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The **Current Allocations** shows your currently defined allocations. Click on **+ New Allocation** to create a new allocation or click on any of the allocations to edit their parameters.

In the first section for each allocation, define the following:

* **Allocation Name:** a friendly name for this allocation for e.g. “Seed Investments”
* **Sector Profile:** select the sector profile to be used for this allocation. Tactyc will use the round sizes and valuations from that sector profile to determine future calculations
* **Entry Round:** select the entry round from the sector profile
* **Capital Allocation (%):** the percentage of investable capital that will be used to make initial and follow-on investments in this allocation

### **Initial Check Strategy**

<figure><img src="https://1366836623-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FWOWjDH33JGp4Ay1omBCB%2Fuploads%2FjzqXZlcNnexdriXqWzkV%2FScreenshot%202023-12-13%20at%209.40.17%20AM.png?alt=media&#x26;token=e52f2918-6fec-464d-b760-002ccd09568c" alt="" width="492"><figcaption></figcaption></figure>

* Initial check size can be entered either as an Amount or as a Entry Ownership (%). For e.g. a 10% Entry Ownership means, the model will invest the amount needed to get a 10% ownership in the portfolio company
* Tactyc will automatically show some helpful calculations such as:
  * Implied Entry Ownership (if you’re entering check size amount)
  * Number of initial investments expected in this allocation
  * Total Capital Allocated towards initial investments in this allocation

### **Follow-On Strategy**

<figure><img src="https://1366836623-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FWOWjDH33JGp4Ay1omBCB%2Fuploads%2Fbm3DdVMSYL0RSsNQCeX7%2FScreenshot%202023-12-13%20at%209.39.48%20AM.png?alt=media&#x26;token=b97a90dd-48cf-4de7-a0d3-8e9a0ff168c2" alt=""><figcaption></figcaption></figure>

* Similar to the initial check section, you may enter a follow-on check size amount for future rounds or ask Tactyc to maintain ownership (%).
* Follow-on Participation (%): This is where you set how often you expect to follow-on. Setting this to 100%, means the fund will follow-on into every single graduation. Setting this to 50%, means the fund will follow-on 1 in 2 graduations.
* The helper calculations show the implied follow-on check sizes, graduations, number of follow-ons and capital allocated

### Initial Investment Horizon and Pacing

<figure><img src="https://1366836623-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FWOWjDH33JGp4Ay1omBCB%2Fuploads%2FASu18pxEJPbOB8OTSVTw%2FScreenshot%202023-12-13%20at%209.40.43%20AM.png?alt=media&#x26;token=81cdeac5-e5a3-439a-bb9e-dd2e3b465b09" alt=""><figcaption></figcaption></figure>

Finally, set your **Initial Investment Horizon** i.e. the time period over which you expect the fund to make initial investments in this allocation.

### **What’s happening under the hood?**

Let’s say your fund’s investable capital is $100mm, and you’ve defined a Seed allocation with capital allocation of 40%. This means $40mm of capital will be used to make initial Seed investments and any follow-on investments for those Seed companies.

* **Based on your initial check size**, Tactyc estimates how many initial investments your fund can make
* **Based on the graduation rates** from your sector profile, Tactyc estimates how many companies will end up graduating
* **Based on your follow-on participation %,** Tactyc estimates how many companies the fund will follow-on into

This $40mm will then be further allocated towards initial and follow-on investments based on the *relative proportions* of initial and follow-on investments. What this means is if you lower your follow-on investments, your initial investments will increase - as there is more capital left over to make initial investments. Conversely, if you increase follow-ons, your initial investments will decrease.

To summarize, Tactyc will always end up fully deploying the entire $40mm of capital - the relative shifts between initial and follow-ons is determined by the check sizes in each category.

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