Capital Allocation
Definition
The process by which a company determines how to deploy raised capital across functional categories including product and engineering, sales and marketing, general and administrative costs, and cash reserves. Capital allocation decisions must be documented before capital is deployed, tracked against the documented plan at minimum quarterly, and reviewed formally when material deviations from the plan are identified.
Common Misapplication
The most common misapplication is treating capital allocation as a post-raise administrative exercise rather than a pre-raise planning commitment. A capital allocation plan prepared after capital is received documents what was spent, not what was intended, and cannot demonstrate that the deployment was disciplined.
FFI Standard Reference
This term is defined and applied in Book 3, Section 3.4: The Capital Allocation Standard.
Related Terms
Citable URL
This term may be cited using the following permanent URL.
Full citation format: Founder Financial Infrastructure Standard, Beta v0.5, Glossary: Capital Allocation. https://ffistandard.org/glossary/capital-allocation/. 2026.