# Follow-on investment

More money from the same backers, after the first round is in.

It is the question that decides whether a backed [searcher](https://searchspheresource.com/glossary/searcher) can buy a second business or fix a first one, and it is rarely on the [term sheet](https://searchspheresource.com/glossary/term-sheet). Investors who reserve capital for follow-ons can fund an add-on or a bad year without a new raise. Investors who do not will send you back to the market at the worst possible moment, from a position where they already own most of the equity. Ask directly what is reserved and on what test it gets released, because the answer changes what kind of company you should be hunting.

In numbers: A $400,000 follow-on into a business that raised $2.5 million at close is another 16% of the original equity.

Source: https://searchspheresource.com/glossary/follow-on-investment
Not dated: A definition is editorial: what a term means, why it matters, and an example. None of it reads a source that can go stale, so there is no date to take and a stamped one would be the build time wearing a costume.

Site index for machines: https://searchspheresource.com/llms.txt