How a Checklist Supports an Investment Case
A checklist gives shape to the investment case by bringing together the team's record, strategy, terms and operations. The same evidence can lead different LPs to different decisions because their existing holdings and cash needs differ.
Hamilton Lane's GP evaluation guide frames the review around five core questions covering the team, net returns, liquidity and portfolio plan. The structure helps prevent an LP memo from becoming a record of meetings instead of a recommendation. Its value lies in focus; brevity matters only when it sharpens the decision.
A clear review process narrows broad manager interest into a small number of evidence-backed commitments. The sequence shows diligence order. Stage width carries no conversion or performance data.
LP Evidence Stack
A clear review process narrows broad manager interest into a small number of evidence-backed commitments.
View chart data and assumptions
| Step | Stage | What the evidence explains |
|---|---|---|
| 01 | Strategy | The investment plan and intended portfolio role. |
| 02 | Proof | Support for the manager's claims. |
| 03 | Terms | Economics, rights and potential conflicts. |
| 04 | Operations | Reporting, controls and provider responsibilities. |
The sequence below is designed for LPs and family offices reviewing a venture fund or related private-technology strategy. It organizes an investment conversation and does not replace legal or tax advice.
A manager can have a strong track record and still be a poor fit. If the institution already owns several seed-stage software funds, another one may add little diversification. The existing portfolio gives meaning to the manager's pitch.
1. Fit with the investment plan
Private investments commonly lock capital for 10 years or more. The stated maturity is not a dependable exit date, so the period covered by the investment case may extend beyond it.
The fund may fill a stage gap or provide access to a market the LP cannot reach directly. That role explains its potential value, while the institution's liquidity and currency limits constrain the commitment.
The existing portfolio changes the value of that contribution. A strong manager can still be a poor addition when its companies and strategy repeat exposure the LP already owns.
2. Manager Selection: Evidence of an Advantage
The range of outcomes explains why manager selection matters. Carta's 2017-vintage sample showed 4.08x TVPI at the 90th percentile, 2.53x at the 75th percentile, and 1.89x at the median. Evidence of repeatable selection is central to the review.
A real investment can reveal how the claimed advantage works. How did the opportunity arrive? Why did the founder choose this fund, and what work led the team to invest?
A passed deal can reveal the limits of that advantage. Its relevance to the new fund also depends on whether the same people remain and whether the approach works at a larger size.
3. Sourcing and Selection
Funnel data shows more when it distinguishes an introduction from serious review. The path from early meetings through committee work to a term sheet reveals how the manager selects investments.
The people who sourced the opportunity and won the allocation explain different parts of access. Seeing many companies but rarely securing preferred deals can make a large headline funnel less valuable.
4. Portfolio Plan
The market data also shows how concentrated the opportunity set can become. In 2025, 487 US megadeals accounted for 67% of total venture value while representing 3.2% of deal count. Look-through exposure can be much more concentrated than company count suggests.
Fund size sets the budget for initial cheques and reserves. Their balance determines the ownership the fund can buy and preserve through dilution.
That ownership links the portfolio plan to the value its largest companies would have to produce. A target that depends on an exit far beyond the manager's market may be hard to reconcile with its strategy.
5. Entry Judgment
Entry judgment becomes clearer in the information available at the time. The valuation case shows which assumptions supported the price and which would have made it too high. Share class and preference then affect the cash received at a weak exit.
Initial ownership can shrink through later rounds. Pro rata rights offer a way to protect it only when reserves leave enough capital to take part.
6. Terms and Alignment
The median recent venture fund still uses 2% management fees and 20% carried interest. Different terms change costs across the fund's life, including the years after the investment period.
The dollar value of the GP commitment shows how much capital the partners supply. A fee waiver or partner loan may create different personal exposure from cash already at risk.
Fees and carry affect the LP's net return. Related SPVs or warehoused assets can also create conflicts, especially when several vehicles want the same company. Allocation terms explain how the manager handles those competing claims.
7. Operations and Reporting
Operations become easier to assess through actual work: approving a call, sending cash to the right account and producing quarter-end reports. Each step reveals the roles of the manager, administrator and auditor, including who reviews asset values.
Contributions, distributions, cost and fair value together explain the account's movement. A judgment-based mark is easier to assess when its method and approver are clear. Company developments give those figures context.
8. Liquidity and Risk
Faster calls and slower distributions can put pressure on cash at the same time. A forecast that combines both shows the strain that separate cases can miss.
A longer wait may put pressure on the fund to sell shares or move assets to a continuation vehicle. Discounts and conflicts can limit the cash these routes provide.
The Final Investment Memo
The memo brings the decision and its limits together. The private equity fund DDQ template for LPs organizes evidence on strategy, team, track record, portfolio plans, terms, operations and references. That evidence forms the basis of the committee's recommendation.
- What evidence supports making the commitment?
- What could make the fund unsuitable?
- Which questions remain open, and how material are they?
- What new facts would change the conclusion?
Adobe-Figma: Strong Operating Metrics Still Ended Without an Exit
Adobe agreed in September 2022 to acquire Figma for roughly $20 billion in cash and stock. In December 2023, the companies terminated the deal after concluding there was no clear path to regulatory approval.
Adobe expected the consideration to be roughly half cash and half stock.
Its operating case included net dollar retention above 150% and gross margin near 90%.
Despite that operating profile, the visible exit path ended when the transaction failed to clear its closing risk.
A strong company may still have no certain exit. Required approvals, closing conditions and rights to end the deal determine whether an announced sale becomes cash. Business quality alone cannot resolve those risks.
Primary sources: Adobe, proposed Figma acquisition (2022); Adobe and Figma, termination announcement (2023). The Adobe-Figma transaction is public evidence and has no connection to a Frontierspace investment or result.
Frequently Asked Questions
What is the most important part of venture fund due diligence?
Actual deals show how the manager's claimed advantage works and which people created the result. The new fund's size and portfolio plan help explain whether those choices can work again.
What is a common venture fund red flag?
A disconnect between the historical record and proposed fund is a serious concern. Changes to the team or strategy may make the earlier results less relevant. The same applies when ownership targets or fund size have moved materially.