Institutional LP Questions for Emerging VC Managers
ILPA's DDQ offers a useful model for the kinds of questions LPs ask before backing a manager. The questions should be specific. LPs need evidence on attribution, decision-making, key persons, conflicts, valuation, reporting, and fund economics. Emerging managers can prepare by turning narrative claims into documents, examples, and references that an LP can verify.
A typical private fund may run 8 to 12 years, so LP questions should test whether the manager can operate through a complete market cycle.
A manager may answer a track-record question by describing the success of the firm where the team previously worked. The LP still needs to connect individual people to individual decisions. If that link remains unclear, the historical return says less about what the new fund is likely to repeat.
Ask for Evidence, Then Test the Trade-Offs
The most useful LP questions test whether the team has a repeatable investing edge and whether the new firm can support institutional capital for a full fund life. The interview should move from evidence to trade-offs rather than ask for polished descriptions.
Questions That Produce Evidence
| Question | Evidence |
|---|---|
| Which prior deals did each partner lead? | Round-by-round attribution and founder references |
| Why is this fund the right size? | Company count, cheque size, ownership, reserves, and deal pace |
| Why do founders choose you? | Win-loss data and references from deals won and lost |
| How will decisions work? | Investment committee rules, partner economics, and conflict process |
| How will LP reporting work? | Administrator, sample report, valuation policy, and calendar |
Ask About the Losses
Winning deals are easy to discuss. Losses show how the manager sizes uncertainty, responds to bad news, and decides whether to invest more. Ask for a company that failed, a follow-on declined, and a deal the team regrets passing. The purpose is not to punish mistakes. It is to understand decision quality and honesty.
Test the Firm as Well as the Fund
Partner roles, ownership, compensation, succession, fundraising budget, and service providers affect whether the organisation can last. A strong investor can still build a fragile firm. New managers do not need the headcount of a large franchise. They need clear ownership of every important function.
End With the Next Fund
What will stay the same? Strategy, stage, and decision team? What may grow? Fund size, staff, and cheque size? What evidence will justify a re-up? Portfolio, operations, and reporting milestones?
What could cause a pause? Team change, strategy drift, or fund-size jump? How will access work? Capacity, co-investment, and communication with LPs.
Good questions make the manager's advantage and gaps visible. They give the LP a monitoring plan before the commitment is made.
A small set of questions usually carries most of the diligence value. Illustrative diligence weighting totaling 100 points. LPs should adjust the weights to their investment plan and evidence needs.
LP Question Map
A small set of questions usually carries most of the diligence value.
View chart data and assumptions
| Question area | Illustrative diligence weight |
|---|---|
| Attribution | 18% |
| Strategy | 16% |
| Sourcing | 15% |
| Construction | 14% |
| Terms | 12% |
| Operations | 10% |
| Conflicts | 8% |
| Reporting | 7% |
Strategy and Market Focus
The documents and process show how this works. NVCA reported that the 10 largest US venture funds captured 32.9% of traditional VC fundraising in 2025. LPs should ask how an emerging manager gets into strong deals despite that concentration.
A few questions bring the issue into focus. What does the fund target, and is the focus specific enough to evaluate? How does the proposed capital match the available opportunity set?
The investor should also check the following. What developments would cause the strategy to stop working?
Manager Advantage and Sourcing
The market data also shows how concentrated the opportunity set can become. Removing 487 megadeals from 2025 leaves roughly 14,865 deals totaling about $105 billion, or $7.1 million on average. The manager should define where its advantage actually operates.
A sensible review starts with the following questions. Which opportunities did the team see before comparable managers? Which founders or sellers chose the manager, and why?
The investor should not proceed without answering the following. What share of investments came from each sourcing route? How do reviewed opportunities progress into investments the manager actually made?
Attribution and Track Record
The effect becomes easier to see. Cambridge Associates found funds settled into their ultimate quartile at roughly 5.8 to 6.8 years. Younger marks need deal-level attribution and valuation review.
The practical questions are straightforward. Who sourced, underwrote, won, and supported each material investment? Which results have produced cash and which remain unrealized?
The review should not stop there. Does the current team genuinely own the performance being presented? Were the results produced with a similar strategy, fund size, and decision process?
Portfolio Plan
The practical difference becomes clearer in the process. A $100 million fund targeting 5 companies, $10 million initial checks, and 50% reserves is internally consistent. Raising the company count without changing the fund requires either a lower reserve ratio or checks below the intended institutional minimum.
A sensible review starts with the following questions. How many companies can significantly affect the fund? What stake must the fund retain after dilution? How is follow-on capital divided among companies?
The investor should not proceed without answering the following. What happens when a portfolio company raises capital below its prior valuation? How many failures can the model absorb before it depends on an extreme outlier?
Operations, Economics, and Conflicts
A sensible review starts with the following questions. Who contributes it, and how is the capital funded? How are carry, fees, and management-company ownership allocated? How are SPVs, co-investments, and warehoused assets governed?
The investor should not proceed without answering the following. What process protects LPs when several vehicles could pursue the same opportunity? Are administration, valuation, cash management, compliance, and reporting dependable?
Using Answers in the Memo
The LP memo should interpret the answers rather than simply reproduce them.
- Identify what the data, documents, and references support.
- State which parts of the case still rely on judgment or incomplete information.
- Decision risks: Explain what could cause the institution to decline, reduce, or condition the commitment.
- Monitoring priorities: Carry the most important uncertainties into post-commitment oversight.
Related reading. emerging manager scorecard and emerging manager due diligence.
Insight Venture Management: fund documents controlled the fee answer
In 2023, the SEC charged Insight Venture Management with excess management fees and an undisclosed fee-calculation conflict. The settlement focused on whether calculations matched the governing limited partnership agreements.
The adviser also paid disgorgement and prejudgment interest.
The SEC said the amount had already been returned to affected funds.
The issue involved the calculation basis after investment impairment.
LP questions should force narrative answers back to documents and calculations. Ask who computes fees, who reviews impairments, how offsets work, when the basis steps down, and how errors are identified and corrected.
Primary sources: SEC, Insight Venture Management fee case (2023). Based on public transaction information; unrelated to Frontierspace performance.
Frequently Asked Questions
What should an institutional LP ask an emerging manager first?
Begin with the investment case and the evidence behind it: why the firm should exist, how opportunities are sourced, and why the team can win and select them repeatedly.
How can LPs compare answers across managers?
Use a consistent evidence matrix covering attribution, sourcing, selection, construction, operations, conflicts, and references, while preserving judgment about strategy-specific differences.
Related Reading
Emerging manager due diligence, Emerging manager scorecard, and Venture fund due diligence checklist.