Glossary - Dry Powder
Dry powder refers to the reserves of liquid cash that companies or investors keep on hand to cover future obligations, undertake new investments without the need to raise external funding, or swiftly capitalize on emerging opportunities. It essentially represents the readily available funds or assets that can be quickly converted into cash to facilitate immediate investment actions.
Also known as
- Cash reserves
- Liquid reserves
Use cases examples
- Venture Capital Fundraising Presentation: Our firm maintains a significant amount of dry powder to ensure we can act on high-quality investment opportunities as soon as they arise.
- Annual Report to Limited Partners: The fund's dry powder has increased by 20% this year, positioning us well for strategic investments in the upcoming fiscal period.
Considerations for investors
- Maintaining an adequate level of dry powder is critical for capitalizing on new investment opportunities without the delay of external fundraising.
- Investors need to balance the amount of dry powder to ensure it is neither excessively idle nor insufficient to seize strategic opportunities.
Considerations for founders
- Understand the investor's current dry powder to gauge their ability to participate in future funding rounds.
- Assessing the amount of dry powder can provide insights into the venture capital firm’s investment strategy and risk appetite.
Get to know our world class tools and services
Transform your operations with world class tools
We have created several tools to help investors spot the best opportunities and manage their portfolio.
Let's unlock your business potential with Automations
Embrace the future with our tailored subscription service that combines strategic planning and practical implementation.