The Complete LP Due Diligence Questionnaire

The exact questions institutional LPs will ask – and how to prepare your answers

If you’re raising a fund from institutional LPs, family offices, or fund-of-funds, you need to be ready for due diligence.

Not the casual “tell me about your thesis” conversation. The real thing: a 50+ question deep dive into your strategy, team, track record, fund structure, risk management, and operations.

Most first-time managers aren’t prepared. They stumble through questions they’ve never considered, scramble to find documents they don’t have, and lose deals because they look disorganized.

This guide provides the complete due diligence questionnaire used by institutional LPs. Use it to prepare before you’re in the hot seat.

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Why Due Diligence Matters

Institutional LPs aren’t just checking boxes. They’re trying to determine if this is a firm they want to continue deploying capital into over multiple funds, not just one. They’re looking for teams that are building an enduring firm.

Just as importantly, they’re looking for both predictability and performance.

Their fundamental questions:

• Can this team execute? (Track record, experience, team dynamics)
• Is this strategy sound? (Market opportunity, differentiation, risk management)
• Are the terms fair and the operations solid? (Fund structure, administration, compliance)

The managers who close institutional capital aren’t necessarily the ones with the best returns. They’re the ones who can clearly articulate their answers to these questions – with data, specifics, and documentation to back it up.

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THE DUE DILIGENCE QUESTIONNAIRE

Fund name:

Management company:

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1. INVESTMENT STRATEGY

This is where LPs spend the most time. They want to understand not just what you’re investing in, but why you have a right to win.

1.1 Investment Focus, Market, and Competition

1.1.1 Briefly describe the fund’s investment strategy and explain why the market opportunity is particularly attractive during the fund’s investment period.

1.1.2 Uniqueness of the strategy: Explain what sets your strategy apart from others.

1.1.3 Identify and describe your key competitors and explain how you believe your strategy provides a competitive advantage.

1.1.4 Who do you consider your most successful competitor, and what have been their results? Why do you think they have been so successful?

1.1.5 Stage focus: Please provide expected portfolio composition in percentages and number of companies at the initial investment stage. For each stage (Pre-seed, Seed, Series A, Series B+), specify the minimum number of companies, maximum number of companies, expected number, minimum investment amount, maximum investment amount, and expected investment amount.

1.1.6 Diversification: Please specify the minimum, maximum, and expected values for: (a) Number of portfolio companies, and (b) Amount invested per portfolio company (total across rounds).

1.1.7 Investment themes: For each investment theme, outline the following: the market opportunity, your team’s unfair advantage, allocation percentage, person responsible, and examples of your team’s relevant experience.

1.1.8 Describe your reserve policy for follow-on investments.

1.2 Deal Flow & Investments

LPs want to see that you have sustainable, differentiated access to quality deals – not just a good network today.

1.2.1 Describe the sources of your deal flow, including the name and nature of each source.

1.2.2 Discuss your relationship with deal flow sources. How long have you worked together, what process do you follow, and what have been the outcomes?

1.2.3 Syndication: Provide the names of potential syndication partners and mention any past collaborations.

1.2.4 Competition: Describe the competition level in deal sourcing and highlight your competitive advantage.

1.2.5 Are there any types of investments that you will not consider? Specify factors that would automatically terminate a deal.

1.2.6 Describe the management company’s due diligence process.

1.2.7 Describe the expected investment structures and vehicles.

1.2.8 Will the fund offer co-investments to LPs or other affiliated entities?

1.3 Value Creation and Exit

LPs need to understand how you’ll generate returns – not just pick good companies, but actively help them succeed and exit.

1.3.1 Explain the viability of the fund’s investment strategy.

1.3.2 What is the return-profile threshold (e.g., gross IRR, money multiples) for targeted investments? What is the expected holding period?

1.3.3 Describe your exit strategy and decision-making process for exits. What expertise do you bring to successfully exiting companies?

1.3.4 Discuss your involvement in portfolio companies.

1.3.5 How does the management team engage with the management of portfolio companies?

1.3.6 What are the criteria for evaluating follow-on investments?

1.3.7 Outline the typical methods used to create value for portfolio companies, including a case study to illustrate value creation capabilities.

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2. FUND STRUCTURE, MANAGEMENT, AND ADMINISTRATION

LPs will scrutinize your fund economics, legal structure, and governance. They want to ensure that you’re building an ultra professional and enduring VC firm rather than a one off fund and  will push back on anything non-standard.

2.1 Fund

2.1.1 Fund size ($ million): Specify (i) Minimum (1st closing), (ii) Target, and (iii) Maximum.

2.1.2 Explain why the minimum, maximum, and target fund sizes are appropriate for the fund’s strategy.

2.1.3 Provide details of the fundraising timeline, including actual or anticipated closing dates. State any indicative commitments to date, and where possible, name the potential investors and their commitment amounts.

2.1.4 Identify and explain any fund terms that deviate from the model Limited Partner Agreement (LPA).

2.1.5 Explain why the waterfall structure described in your application is suitable for the fund.

2.2 The Management Company and the General Partner

This is where LPs assess the business behind your fund – ownership, structure, and potential conflicts.

2.2.1 Provide background information on the management company, including its establishment, activities, founders, and any ownership changes. How will it evolve when managing this fund?

2.2.2 Provide an overview (including chart) of the current ownership and legal structure of the management company and the general partner.

2.2.3 State the registration or license status of the management company and other necessary licenses for fund marketing.

2.2.4 Does the management company have any unrelated business lines or income sources?

2.2.5 List all previous investment vehicles managed by the management company, including those with different strategies.

2.2.6 Describe the decision-making process for investments and exits, including the voting majority required.

2.2.7 Outline the compensation structure for team members, including salary, bonuses, performance incentives, profit sharing, carried interest, and equity ownership.

2.2.8 Explain how the general partner’s contribution for investments will be financed.

2.2.9 Is the management company outsourcing any of its activities? Please explain the reasons, name the outsourcing partners, and describe the processes and insurance coverage for those tasks.

2.3 Management Team

This is where LPs assess whether YOU are the right person to execute this strategy for the long term. They’re looking for an enduring team. Key-person risk is one of their biggest concerns.

2.3.1 Provide a list of team members (investment professionals and support staff), their roles, responsibilities, and business time share for the fund.

2.3.2 Have team members worked together before? Have they previously made joint investments?

2.3.3 Provide the investment experience of team members, including access to deals and deal execution.

2.3.4 List team members with experience managing and adding value to VC companies.

2.3.5 List team members with experience in existing investments, along with a brief description of their involvement.

2.3.6 Describe any other relevant experience or expertise of the team members and how this adds value to the management company’s activities.

2.3.7 Indicate any outside activities of the team members and whether these activities could bring added value to the fund.

2.3.8 Are any team members engaged in high-risk activities?

2.3.9 Are there any conditions (health, financial, litigation, personal, etc.) that could affect a team member’s ability to fulfill their duties to the fund?

2.3.10 Discuss the management company’s succession plans.

2.3.11 Provide a description of the management company’s culture.

2.3.12 Describe the role of the management company’s internal advisory board(s), as well as any additional governing or advisory bodies impacting management or investment activities.

2.3.13 Track record: Group the exits by sector or investment theme and by investment professional, including the professional’s role in each investment. For each investment, list key data points including: initial investment date and amount, follow-on investments, total acquisition cost, exit date and amount, net IRR, and cash-on-cash multiples. Include the key value drivers for each exit and your role in creating that value. Attach this information as an appendix.

2.4 Administration

LPs are looking for institutional-grade operations. They want to ensure that you did not cut any corners and are managing this firm like a professional money manager. Operational failures sink funds.

2.4.1 In-house administration: What tasks are performed in-house?

2.4.2 Which support functions are outsourced?

2.4.3 Describe the fund’s internal and financial accounting.

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3. MARKET STATUS, COMPETITION, AND RISKS

LPs need to understand what can go wrong and how you’ll handle it. The “investments that went wrong” question is critical – they’re looking for self-awareness, not perfection.

3.1.1 Discuss the risk factors of the fund’s investment strategy and the steps taken to mitigate these risks.

3.1.2 Discuss the management company’s risk management. What types of risks are monitored and how are they measured?

3.1.3 Provide examples of active/exited investments with an investment multiple (TVPI) below 1.0x. Discuss what went wrong, actions taken, and lessons learned.

3.1.4 What types of insurance coverage does the management company maintain?

3.1.5 SWOT analysis: Provide a detailed analysis covering (i) Strengths, (ii) Weaknesses, (iii) Opportunities, and (iv) Threats for both the managers and the fund strategy.

3.1.6 Describe any past criminal or administrative proceedings or investigations against the management company, its affiliated entities, and/or its current and former team members.

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4. REFERENCES

LPs will want to speak with people who know your work. Prep your references – let them know a call may be coming. Assume lots of off-list reference checks.

Note: LPs also conduct off-book references – they will reach out to people in their network who know you, beyond the names you provide.

List people who are available for reference calls or meetings. Prepare the list for each investment professional separately. Include each reference’s name, their relationship to you, and their contact information.

By completing this due diligence questionnaire, each of the management team members gives the LP the right to contact the persons mentioned and ask them questions for reference purposes.

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5. CONTACT INFORMATION

5.1 Management company’s and general partner’s contact details

For each key contact, provide: Name, Mobile, Email, and Other contact methods (e.g., Skype).

5.2 Legal adviser to the management company and the general partner

Provide: Name, Office, Mobile, and Email.

5.3 Other advisers to the management company and the general partner

For each adviser, provide: Name, Type of Advice, Mobile, and Email.

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6. OPERATIONS DOCUMENTS

This is where LPs find out if you cut corners.

LPs may request the following operational documentation:

• Operations Manual
• Staff organization diagram
• Biographies of key personnel
• Risk policies and procedures
• Details of insurance coverage
• Cash transfer process / list of authorized signatories

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7. LEGAL / REGULATORY / GOVERNANCE DOCUMENTS

This is where LPs find out if you cut corners.

LPs may request the following legal and compliance documentation:

• List of regulatory authorities that funds/manager fall under
• Compliance manual
• Code of Ethics
• Allocation Policy
• Valuation Policy
• Form ADV
• List of internal committees
• LPAC members
• Investment implementation diagram / description
• Summary of pending and past litigation / arbitration
• Summary of all side letter terms
• Co-investment policy
• Privacy Policy

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8. FUND DOCUMENTS

This is where LPs find out if you cut corners.

LPs will review the following fund documentation:

• Offering documents
• Subscription documents
• Limited Partnership Agreement
• Memorandum of Association / Articles of Association
• Audited financial statements for all related vehicles for last three years
• Waterfall distribution example

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How to Use This Questionnaire

Before You Start Prospecting Professional LPs

Before you start prospecting professional LPs with layers of staff and processes:

Complete every section – Even if you think a question doesn’t apply, have an answer ready.

Build your data room – Organize all supporting documents (Sections 6-8) in a secure, shareable location.

Prep your references – Contact them before LPs do; remind them of your working relationship.

Practice your answers – The written responses should match what you say in meetings.

During Due Diligence

Respond quickly – Delays signal disorganization.

Be transparent – LPs will find inconsistencies; get ahead of any issues.

Ask clarifying questions – If you don’t understand what they’re looking for, ask.

Red Flags LPs Watch For

• Vague or generic answers (especially on strategy differentiation)
• Inability to discuss investments that went wrong
• Gaps in track record attribution
• Non-standard terms without clear justification
• Disorganized or missing documentation
• References who seem unprepared or lukewarm
• No compliance program
• Not working with a reputable fund admin and operations company
• Missing key policies (valuation, allocation, compliance, etc.)

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The Bottom Line

Due diligence isn’t a test you pass or fail. It’s a conversation that reveals how well you know your own business.

The best managers treat DD prep as an exercise in self-improvement. If you can’t clearly answer these questions, that’s valuable information – it tells you where to focus before you’re in front of LPs.

Start preparing now. Document your processes. Build your data room. Practice your answers.

When the real DD process starts, you’ll be ready.

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This questionnaire framework is adapted from institutional standards including Meyer T. & Mathonet P-Y. (2007), Beyond the J Curve; Institutional Limited Partners Association (ILPA) Standardized Due Diligence Questionnaire; and Decile Capital’s internal processes.

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