Raising and closing

Due diligence questionnaire

Also known as DDQ

A standard list of questions investors send to a manager before committing.

It covers the team, strategy, track record, operations, compliance, risk, valuation, cyber security and more. Institutional LPs may use their own version, and answering well takes time, so most managers keep a ready-made set of responses.

Many LPs use a standard industry questionnaire as a base and add their own questions on topics such as responsible investment, cyber security, diversity or tax. Answers are reviewed by investment, operations and legal teams, and inconsistencies are followed up.

Keeping a maintained answer library, updated each quarter, saves weeks during a raise. First-time funds should be ready to explain operational gaps honestly and show how they are addressed, for example by using an outsourced administrator, compliance consultant and auditor.

Worked example

A pension's consultant sends a 180 question DDQ to a $150M Fund I. The GP answers 140 questions from its library in two days, drafts the remaining 40 on the fund's valuation policy, cyber controls and business continuity, and returns it within a week with supporting policies attached.

Why it matters when you raise

Being ready with polished, consistent answers signals a professional operation, especially for a first-time fund.