Template

Venture Capital Fund Due Diligence Checklist

A venture checklist focused on sourcing edge, ownership, reserves, and mark-to-DPI conversion.

What this template is for

Venture diligence requires patience with marks and skepticism about claimed edge. This checklist focuses on the dynamics that actually drive venture outcomes: sourcing, access, entry ownership, reserve discipline, partner attribution, mark quality, and the path from TVPI to DPI.

When LP teams use it

Seed or early-stage venture fund evaluation
Series A or early-growth venture fund evaluation
Multi-stage venture fund evaluation
Re-up on an existing venture manager
Emerging venture manager evaluation
Opportunity fund or SPV evaluation
IC preparation for a venture commitment

The template

Strategy specifics

Stage focus: pre-seed / seed / Series A / growth / multi-stage
Sector focus: consumer / enterprise / deep tech / life sciences / fintech / climate / other
Lead vs. follow check approach
Initial check size range
Target portfolio company count
Target ownership at entry
Target ownership at exit
Geographic focus
Concentration vs. portfolio breadth
Reserved capital per initial investment
Fund size vs. strategy fit
Where this fund sits in the firm's product set
What makes this strategy hard to replicate
What environments would make this strategy struggle

Fund size and portfolio construction

Current fund size vs. prior fund size
Fund size growth rate across vintages
Expected number of core positions
Expected number of follow-on positions
Initial check / reserve split
Target gross multiple needed to return the fund
Ownership needed in winners to drive fund-level outcome
Maximum exposure to one company
Maximum exposure to one sector
Use of SPVs or opportunity funds
Recycling assumptions
Can the strategy still work at this fund size?
What happens if exit markets remain closed?

Sourcing and access

Proprietary sourcing channels and proof
Partner network and founder network
Platform team contribution to sourcing
Co-investor patterns
Win rate on competitive rounds
Inbound vs. outbound mix
Repeat-founder access
University, accelerator, operator, or angel network access
Evidence of access to top-tier rounds
Deals won and why
Deals lost and why
Deals passed on and why
Founder selection criteria
How sourcing advantage has changed as the firm scaled

Ownership and reserves

Initial ownership target
Actual initial ownership by deal
Dilution discipline
Pro-rata strategy
Reserve ratio
Follow-on decision framework
When the GP doubles down vs. stops supporting
Concentration in top positions
Bridge financing policy
Insider round policy
Pay-to-play exposure
Cross-fund investing policy
Opportunity fund or SPV practice
Allocation between main fund, opportunity fund, and SPVs
How the manager protects ownership in winners
Examples where reserve decisions helped or hurt returns

Portfolio support and founder value-add

Platform services: recruiting, business development, finance, GTM, talent, capital markets
Board engagement model
Post-investment touch frequency
Founder reference quality
Examples where the GP materially changed company outcome
Examples where the GP could not help
How the GP helps with follow-on financing
How the GP behaves when a company misses plan
Founder feedback on responsiveness
Founder feedback on strategic value
Founder feedback during difficult periods
Evidence that platform claims are used by portfolio companies

Mark discipline and valuation quality

Mark-up policy
Mark-down policy
Use of recent financing rounds
Use of internal valuation marks
IPCV or valuation committee process
Treatment of insider rounds
Treatment of bridge rounds
Treatment of flat rounds
Timing of markdowns after company deterioration
History of write-downs and write-offs
Consistency of marks vs. subsequent exits or secondaries
Unrealized value as percentage of TVPI
Companies marked above last round and rationale
Companies held at cost and rationale
Valuation discipline compared with peers

Realization and DPI path

DPI by vintage
TVPI-to-DPI conversion by vintage
Holding period to DPI
Secondary sale practice
Distribution policy
IPO, M&A, secondary, and tender-offer exit history
Realized winners vs. marked winners
Expected path to liquidity for top positions
Current exit market dependency
Companies needing additional capital before exit
Time from initial investment to realization
Evidence that the manager sells when appropriate
Any reluctance to distribute public stock or realized proceeds

Performance

Gross and net IRR, TVPI, DPI by fund
Top-deal concentration of TVPI
Top-deal concentration of DPI
Loss ratio at company level
Power law distribution of outcomes
Hit rate by fund
MOIC distribution by company
Performance by partner
Performance by stage
Performance by sector
Realized vs. unrealized split
Benchmark comparison: venture-specific
Performance excluding top one or two companies
Performance attributable to follow-on decisions
Performance attributable to entry ownership

Terms specific to venture

Management fee rate and step-down
Tiered management fee: active vs. post-investment period
Carry, hurdle, catch-up, and waterfall
GP commitment
Fund term and extension rights
Recycling provisions
Cross-fund investing consent
Opportunity fund consent
SPV allocation policy
Co-investment rights
Pro-rata allocation policy
Key-person provisions
Removal rights
MFN rights
Reporting rights
Side letter asks
Any terms that deviate from market

Operational due diligence

Fund administrator
Auditor
Counsel
Tax advisor
Valuation policy
Valuation committee or IPCV process
Compliance program and CCO
Cybersecurity and business continuity
Allocation policy across main funds, opportunity funds, and SPVs
Conflicts policy
Personal investment policy
Use of warehoused deals
Use of scout programs
Portfolio company data collection process
Past or pending litigation, regulatory, or compliance matters

References

On-list LP references
Off-list LP references
Founder references
Former founder references from difficult outcomes
Co-investor references
Former employee references
Angel, seed, or operator network references
Reference feedback on access
Reference feedback on founder support
Reference feedback on reserve discipline
Reference feedback on transparency around marks
Reference feedback on behavior when companies struggle

Emerging manager questions, if applicable

Prior investing track record before this fund
Attribution from prior firm
Rights to show prior deals
Evidence of independent sourcing
Ability to win allocations without prior platform brand
Anchor LPs
Fund size discipline
Back-office readiness
Budget and runway for the management company
Team durability
Succession or key-person risk
Ability to reserve appropriately at small fund size
What has to go right for this firm to institutionalize?

Re-up specific questions, if applicable

What changed since the prior fund?
Has fund size increased faster than opportunity set?
Has ownership discipline improved or worsened?
Has reserve discipline improved or worsened?
Did the prior fund perform for the reasons we underwrote?
Is TVPI converting to DPI?
Are marks proving durable?
Has the team changed?
Has strategy drifted?
Has access improved or weakened?
Have terms changed?
Should we increase, maintain, reduce, or pass?
What would make us not re-up?

Red flags and mitigants

High TVPI with low DPI and no clear liquidity path
Fund size growth ahead of demonstrated sourcing capacity
Declining entry ownership
Reserve strategy not matched to portfolio construction
Heavy reliance on one unrealized company
Partner attribution concentrated in one person
Platform claims not supported by founder references
Insider rounds driving marks without outside validation
Weak markdown history
Opportunity fund or SPV conflicts
Strategy drift into later-stage deals
Cross-fund allocation issues
High loss ratio with limited power-law upside
Emerging manager without back-office readiness
Identified concern
Severity: low / medium / high
Manager explanation
LP team view
Mitigant
Follow-up owner
Status

Final diligence conclusion

One-paragraph investment view
Primary reason to invest
Primary reason not to invest
Biggest underwriting question
Biggest mark-to-DPI question
Open diligence items
Recommended commitment size
Recommendation: proceed / proceed with conditions / defer / pass
Conditions to close
Items to monitor after commitment
Reviewer confidence level

Common mistakes

Treating TVPI as evidence of skill before DPI exists
Underweighting reserve discipline and pro-rata follow-on
Crediting platform claims without founder references
Ignoring mark-down history or the absence of it
Failing to ask about cross-fund and opportunity-fund mechanics
Ignoring fund size growth because prior marks look strong
Overlooking partner-level attribution
Failing to test whether access is repeatable without a hot market
Treating entry ownership as a detail rather than a return driver
Not separating realized winners from marked winners
Ignoring how the GP behaves when portfolio companies struggle

How Allocator Desk manages this in a live system

Creates a venture diligence workflow with sourcing, ownership, reserves, mark discipline, and realization fields
Tracks TVPI-to-DPI conversion over time by fund, manager, and vintage
Preserves partner attribution, founder references, co-investor feedback, and off-list reference notes in one record
Surfaces cross-fund, opportunity fund, SPV, and pro-rata consent requests in the obligations tracker
Connects quarterly monitoring, annual meeting notes, reference calls, and prior IC memos into the re-up record
Flags fund size growth, ownership dilution, mark quality, and reserve discipline issues before IC
Turns venture diligence from a narrative about access into a searchable record of ownership, judgment, and realization quality