How drift happens
Three patterns we see across early-stage funds:
- The "co-investor told me to" cheque. Your favourite GP friend is in. You sign without independent diligence. 60% of these turn out badly.
- The "we already own X% so let's protect" cheque. Pro-rata into a flat-line company because you can't bring yourself to mark it down. The metrics aren't there but you wrote it anyway.
- The "celebrity founder" cheque. A famous founder from a previous successful exit raises a new venture. You sign because of the name, not the thesis. Often 5–10× too high a valuation for the actual product.
The pre-commitment device
Write down — at fund formation — the rules that govern your future self. Read them before every IC.
Vertex Micro · Pre-commitment device · 2026 We will NOT write a cheque if any of these are true: - Outside our published thesis sectors - Pre-money > $25M (seed) / > $100M (Series A) - We can't reference-call 3 founders & 5 customers in 14 days - Founder hasn't replied to our follow-up within 5 business days - We don't have at least one team member with operating experience in the founder's domain - The cheque is < $250K (we are not a small-cheque fund) We will explicitly check these before each IC. Override requires: - 2 partners signing the deviation memo - Memo includes "this rule was wrong because..." - Logged in our deviation log (review quarterly)
The quarterly portfolio review
Once a quarter, take 4 hours. Cohort the portfolio:
- Top quartile: on or above plan. Question: are we reserved enough to defend our position through Series A and B?
- Second quartile: tracking at 50–80% of plan. Question: is there one specific intervention (hiring, GTM, customer ref) that could unlock acceleration?
- Third quartile: drifting. Question: are we in denial about needing to write this off, or is there genuine optionality?
- Bottom quartile: dead or dying. Question: have we marked them honestly to LPs?
The honest mark. Marking down portfolio companies hurts your IRR and your ego. Refusing to mark them down hurts your LPs and, eventually, your reputation. Mark honestly; explain to LPs why; move on.
The drift signals to watch monthly
- Cheque size variance. If your average cheque has crept from $750K to $1.4M without a fund-size change, you're probably under-portfolio'd.
- Sector concentration. If sector #1 is >40% of capital deployed, you've drifted into specialisation. Decide: is that intentional?
- Diligence depth. If your last 3 deals have averaged less reference-call work than your first 10, FOMO is winning.
- "Let's just write a small cheque" frequency. Each one feels harmless. Five of them per fund cycle is a portfolio.
What to do when you've drifted
You probably can't undo the cheques. You can:
- Pause new cheques for 30 days. Re-read your thesis. Talk to your LPs about what they've noticed.
- Tighten the pre-commitment device. Add the specific rule that would have caught the off-thesis deal.
- Accept that 1–2 deals out of 25 will be honest mistakes. Three or more is a pattern.