Diligence on the fund, not just the pitch.
Send the LPA, the deck and the track record. Get back the terms that actually govern your economics, the landmines an experienced LP would catch on page 140, and the questions to put to the GP before you commit.
The allocator without an investment committee.
A family office writing one to five million into a fund. One or two investment professionals. Ten to twenty opportunities a year, each with a one-to-two-week window because the close is already dated.
What arrives is a two-hundred-page limited partnership agreement, a forty-slide deck, and a spreadsheet of quarterly flows. Nobody reads it cover to cover. The terms that decide your economics are the ones buried deepest — the waterfall, the clawback, what counts as the fee base, whether the GP actually put cash in.
Institutional allocators have a team for this. Consultants will do it for fifteen to thirty thousand a fund. Neither is available to you on every deal in the pipeline, so the honest default has been gut feel and the GP's own framing.
What you send. What comes back.
Whatever the GP gave you
- The LPA — and the PPM, the tear sheet, the DDQ, the audited financials
- The pitch deck, in whatever shape it arrived
- The track record workbook — the spreadsheet of contributions, distributions and NAVs
- Your own mandate — return target, liquidity horizon, concentration limits, how much you have left to commit
A read you can act on
- The terms, extracted — fee, carry, hurdle, waterfall, clawback, GP commitment, key-person, fund term. Each one with the sentence and the page it came from.
- Flags and landmines, ranked by severity, each pointing at its evidence
- Performance computed from the flows you confirmed — multiples, net return, and how it compares against public markets
- A decision memo you can read in ten minutes
- Questions for the manager — specific, sourced, ready to send
The clauses that cost you money.
None of these are hidden. They are all in the documents you were sent. They are just on page 140, in language written by the GP's counsel, and they rarely come up on the call.
A deal-by-deal waterfall
Carry is paid on each winner as it exits, rather than after the whole fund clears its hurdle. You can pay carry on a fund that loses money overall.
No clawback provision
Nothing obliges the GP to return carry they were overpaid on early exits. Paired with a deal-by-deal waterfall, this is the single most expensive combination in a fund agreement.
No key-person provision
The people you are backing can leave and the fund keeps investing your capital, with no pause and no consent required from you.
GP commitment funded by waived fees
The alignment you were sold is an accounting entry rather than the manager's own cash at risk.
Fees charged on gross assets
Management fee calculated on a base that includes leverage, rather than on the capital you actually committed.
A NAV facility or subscription line
Borrowing against the portfolio, or delaying capital calls, both flatter the reported return without improving the underlying one.
Carry above the market rate, or no hurdle
Above-twenty-percent carry, or a structure where the manager earns it without clearing a preferred return first.
Weak clawback language
A clawback that technically exists but is unsecured, uncapped in time, or net of taxes in a way that makes it hard to enforce.
Every flag points at the sentence that triggered it, so you can read the clause yourself and decide whether you care.
It will not guess, and it will not decide.
Nothing is computed until you say the flows are right.
The track record workbook is read for you and laid out as dated flows — but it stops there until you check it. Performance is arithmetic on numbers a human has confirmed, never on numbers a model believed it saw in a spreadsheet.
Where the evidence runs out, it says so.
If there is no confirmed set of flows, the return fields stay empty and say why. They are not back-solved from the marketing deck. A blank you can trust is worth more than a number you can't.
Run it on a fund you're looking at now.
We're onboarding a small number of allocators. Bring a live LPA and a track record, and judge the read against your own.