Does your investment committee fit the range you invest in?

Can the committee assess the mandate?

This check brings two choices together: how the investment committee votes and how broad the fund’s industry scope is. The question is whether the decision process fits the range of investments it is asked to assess.

Imagine a committee covering several unfamiliar sectors. Requiring every partner to agree may create a useful challenge, or it may slow decisions where expertise sits with one person. Delegating authority changes that tradeoff. The check flags combinations worth discussing; it cannot judge the quality of the debate.

Revisit the process when the thesis changes

A mandate can broaden while the original voting process stays in place. Review who develops the investment case, who challenges it and who has authority to decide. That makes the governance choice easier to explain to partners and LPs.

A question that comes up on all three IC checks

Readers ask a version of the same question on each of the three checks that read the investment committee: does the norm against funding competing companies still hold, and does the model assume it does. The honest answer is that the norm is visibly eroding, and that the model does not depend on it either way.

Charles Hudson of Precursor Ventures has argued that as venture fund sizes keep growing, the tradition of firms holding a norm, if not a stated policy, against investing in competitive companies is likely to go away, and that this is a case where the business model for large funds is at odds with what most founders want. Chris Neumann, writing up that argument, notes that smaller funds and single-stage specialists are rethinking their own approach as well.

This is a long-simmering tension rather than a new development. Hunter Walk laid out the same mechanism in 2019, observing that large firms writing early checks would eventually find they had blocked themselves out of a category, and predicting pressure on the traditional principle that a firm will not back two competing companies. Two arguments seven years apart, reaching the same conclusion, is evidence of a slow structural drift, not of a break.

What this means for these three checks is narrow. The model reads the firm's declared voting structure, its declared scope, its declared economic rights, and its partner count, and asks whether those choices fit each other. It does not read the firm's conflict policy, and it takes no position on whether a firm should hold one. A firm that has relaxed its conflict stance has changed something real about how it operates, and the model will see that only where it changes one of the structural variables above.

• VCs are Changing Their Tune on ConflictsChris NeumannQuotes Charles Hudson of Precursor Ventures on why the norm is likely to go away as fund sizes grow.
• Coming Storms: Three Reasons That VC Firms May Start Overlooking “We’re Conflicted” and Make Competing InvestmentsHunter Walk, October 2019The same argument, made seven years earlier.

Keep the partnership context

Consensus, majority and delegated decision-making can all work. This model compares the declared structure and scope; it does not observe partners’ expertise, committee conduct or the protections in an agreement.

As one of the ten stage-independent congruence checks, it applies the same relationship across Conviction, Cadence and Continuity. The result remains a prompt to review the process in your own context.