In the world of fund investments—whether you’re considering a VC fund, private equity vehicle, or fund of funds (FoF)—success often hinges not just on returns, but on asking the right questions early.
At Soldatović Holding, we advise investors and enterprises through complex financial ecosystems. One of our key tools is a practical, investor-first checklist—built around real-world criteria used by seasoned LPs, family offices, and institutional allocators. Here’s how we approach fund due diligence before recommending any allocation:
Strategic / Geographic / Mechanic Fit
Before anything else: does the strategy actually make sense?
- Is the investment thesis clearly defined and supported by regional expertise?
- Is the fund size realistic for the opportunity set?
- Are deal mechanics (ticket size, follow-on capacity, timing) aligned with market norms?
Track Record
Numbers are just the start. Ask:
- Who is responsible for the historical performance?
- Are there red flags (politically exposed persons, unresolved reputational issues, poor exits)?
- Has the GP or team actually delivered results under similar market conditions?
Team Composition & Cohesion
Founders matter, but so does the operating core.
- Is this the first time the team is working together?
- Are key people committed long-term?
- Is it a solo GP risk or a stable team with complementary skills?
Ownership & Carry Alignment
Is the GP truly independent, or a semi-captive setup with conflicts?
Is carried interest split in a way that incentivizes performance at all levels?
- E.g., Managing Partners (45–60%), Junior Partners (15–25%), Reserves (5–15%)
Investor Syndicate
Who else is sitting at the cap table?
Do others have special rights (fee breaks, governance levers)?
Are you aligned on exit expectations and re-ups?
Jurisdiction & Legal Setup
Is the fund domiciled in an LP-friendly jurisdiction? (e.g., Luxembourg, Cayman, Delaware)
Any non-standard structures, SPVs, or tax blockers that could introduce friction?
Governance & Terms
Understanding governance structure is critical. Focus on:
- Investment Committee rules (who has veto power?)
- Management fees: typically 2% during the investment period, reducing after.
- Carried interest: standard 20%, but some may push 30% over 3x TVPI thresholds.
- Key Person clauses: what happens if a founder leaves?
- GP Removal clauses: for cause or no-cause—what protections do LPs have?
Additional Risk Controls
Investor clawback: Can distributions be recalled if things go south?
GP clawback: Is there a mechanism to recoup overpaid carry?
Borrowings: Limited to undrawn capital or max 15% of total commitments.
Successor fund limits: No raising a new fund until 45% of prior is deployed.
Conflict of interest rules: especially for crossover rounds and team-owned companies.
Operational Infrastructure
Strong operations prevent weak returns. Look for:
- Deal tracking systems (Pitchbook, Dealroom, CRM)
- Clear process for vertical mapping, IC memos, AML/KYC, ESG policy riders
- Standardized legal templates and fund administrator reviews
Final Thoughts
Early-stage funds require more “vision” than spreadsheet rigor. Later-stage vehicles demand sharp financial engineering. Fund of funds require expert legal governance navigation.
As your finance advisory partner, Soldatović Holding helps ensure that your capital is not just deployed—but defended, grown, and compounding.
→ Looking to structure your next fund or evaluate GP partnerships? Contact us to start the conversation.
