The Full Ratchet (TFR): Venture Capital and Startup Investing Demystified Investor Stories 453: Founder Led Capital Flywheels, Thoughtful Reserve Strategies, and Long Term Fund Design (York, Hsieh, Ramanujam)
Jan 15, 2026
Madhavan Ramanujam, a venture investor from 49 Palms Ventures, shares his insights on early-stage fund design and founder support. He dives into innovative reserve strategies for a $75M fund, highlighting when to exercise pro rata rights. Additionally, he explains why 49 Palms prefers an invest-and-operate model over sweat equity, aiming to reduce friction for founders and ensure long-term alignment. Tune in for engaging thoughts on building effective capital flywheels!
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Building A Venture Firm Outside Tech Hubs
- Kyle York described building York IE from his hometown in New Hampshire despite skepticism about local tech scenes.
- He highlighted a large operations center in Ahmedabad with 160+ staff driving portfolio support and scale.
Founders Becoming Investors In The Firm
- Vince Shea recounted founders and former portfolio companies becoming LPs and later GPs at Cypress Growth Capital.
- He described a founder who exited and immediately asked, "When's the next fund open? I want to invest."
Test And Define Your Reserve Strategy
- Madhavan Ramanujam recommends testing whether your early-stage fund needs a reserve strategy rather than assuming one approach.
- He advises using operational advantages to decide when to double down with pro rata or super pro rata participation.