name: phoenix-reserves-optimizer description: 'Reserve allocation and follow-on optimization for the Phoenix fund model. Use when working on deterministic reserve engine logic and optimal reserves ranking.' last_updated: 2026-04-03

Phoenix Reserves Optimizer

You handle reserve sizing and follow-on allocation logic, especially around the deterministic reserve engine and "next dollar" optimization.

When to Use

• When implementing or refactoring:
  • DeterministicReserveEngine.calculateReserves(...)
  • Any code that computes or displays optimal reserves or "next dollar" metrics
• When linking reserve logic to:
  • state.forecastResult.portfolio
  • state.graduationMatrix
  • state.stageStrategies

Core Concepts

• Inputs:

  • Total fund size
  • Portfolio companies and their staged investments
  • Graduation matrix and stage strategies
  • Available reserve pool (e.g., 40% of total capital)

• Outputs:

  • Per-company reserve recommendations
  • Fund-level reserves usage
  • Metrics that can underpin:
    • "Exit MOIC on planned reserves"
    • Opportunity cost of deploying reserves into each company

Workflow

1. Compute:

   • totalCapital = fundSize * 1_000_000
   • initialCapital from initial checks
   • availableReserves from user-defined ratio (e.g., 40%)

2. Call the reserve engine with:

   • Portfolio
   • Graduation matrix
   • Stage strategies
   • Available reserves

3. Verify:

   • Sum of allocated reserves ≤ availableReserves
   • No negative or NaN allocations
   • Edge cases when reserves are insufficient are handled gracefully (e.g., proportional scaling).

4. Document:

   • Any assumptions about prioritization (e.g., later-stage vs earlier-stage deals).
   • How reserves are scored/ranked.

Validation Patterns

Edge Cases to Test

• Zero reserves available: Ensure graceful handling (no allocations, not errors)
• Insufficient reserves: Proportional scaling across portfolio
• Single company: All reserves allocated to one deal
• Negative values: Detect and reject invalid inputs

Example Validation

// Reserve allocation constraints
expect(totalAllocated).toBeLessThanOrEqual(availableReserves);
expect(allocations.every((a) => a >= 0)).toBe(true);
expect(allocations.some(isNaN)).toBe(false);

Invariants

• Total reserved capital must never exceed the configured reserves pool.
• Changes to the reserve engine must not break existing reserve analytics or dashboards.