A structured walkthrough of how institutional venture capital funds move a company from first contact to wired capital and beyond. This guide describes the seven stages, the activities inside each, and the artefacts a disciplined fund produces along the way.
The process is intentionally adversarial: each stage compresses the funnel and forces explicit evidence before progressing. The aim is not speed; the aim is decisions that survive review years later.
Why structure matters
Early-stage data is incomplete by default. Structure does not make the data complete; it makes the missing pieces visible. A well-defined process surfaces friction, flags uncertainty, and keeps the investment committee focused on what can actually be known versus what is still a bet.
01
Sourcing
Sourcing is the systematic identification of investable companies. Funds combine inbound deal flow, outbound prospecting, scout networks, and ecosystem partnerships to assemble a steady top of funnel.
Core activities
Network referrals from operators, founders, and co-investors
Outbound research across sectors and geographies
Accelerator demo days, conferences, and ecosystem events
Thesis-driven cold outreach to companies that fit current focus
Expected outputs
A continuously refreshed pipeline of new opportunities
Brief one-line characterisation of each company
Initial fit signal against the fund's investment thesis
02
Screening
Screening compresses a broad funnel into a defensible shortlist. The goal is not to be right; the goal is to discard misaligned opportunities quickly and protect deeper review for companies that warrant it.
Core activities
Pitch deck review against fund thesis and stage filters
Founder background and market sanity checks
Initial unit economics review (where data exists)
Calibration calls with the founding team
Expected outputs
Pass / continue decision with reasoning
Shortlist of companies progressing to due diligence
Documented rationale for each rejection (for audit and learning)
03
Due diligence
Due diligence converts a pitch narrative into a structured evidence file. It covers team, product, market, traction, financial, moat, and risk. See the companion 99-point framework for the full checklist.
Core activities
Team and reference calls (current colleagues, prior employers, customers)
Product demos, technical review, architecture and security review
Financial review: unit economics, runway, capital efficiency
Legal and corporate hygiene (cap table, IP, contracts, compliance)
Expected outputs
Due diligence dossier organised by pillar
Risk register with open questions and unresolved items
Verdict-grade summary memo for the investment committee
04
Investment committee
The investment committee is where evidence meets accountability. A well-run IC is adversarial by design: partners pressure-test assumptions, surface dissent, and document the decision in a form that can be re-examined years later.
Core activities
Pre-read of the IC memo by all partners
Sponsor partner walks through thesis and risk register
Structured debate on the strongest objections
Vote, conditions, and explicit dissenting views recorded
Expected outputs
IC decision (approve, approve with conditions, decline, defer)
Conditions precedent for closing
Written record of dissent and unresolved questions
05
Term sheet and negotiation
The term sheet translates the IC decision into commercial terms. It is non-binding on most clauses, but it anchors the closing documents and signals the fund's posture on governance, control, and downside protection.
Liquidation preference, anti-dilution, and pro-rata rights
Board composition and information rights
Founder vesting, lock-ups, and protective provisions
Expected outputs
Signed term sheet
Agreed exclusivity / no-shop window
Clear path to closing documents
06
Closing
Closing converts the term sheet into binding documents and moves capital. The work is procedural but unforgiving: a missed condition or unreconciled cap table can delay a round by weeks.
Core activities
Confirmatory legal, financial, and technical diligence
Drafting of SHA, SSA, and ancillary closing documents
Cap table reconciliation and option pool refresh
Wire instructions, KYC, and regulatory filings
Expected outputs
Executed financing documents
Funds wired and share certificates issued
Updated cap table reflecting the new round
07
Post-investment and portfolio support
Sourcing wins headlines; portfolio work compounds returns. After closing, the fund's job shifts from underwriting to support: governance, hiring, follow-on capital, and structured monitoring against the IC thesis.
Core activities
Board cadence and reporting standards
Hiring support for executive and key technical roles
Verdict integrity loop: thesis vs. actual outcomes over time
Exit-readiness assessment
What this guide does not capture
Process discipline cannot substitute for judgement on founders, markets, or timing. Funds vary in how they weight each stage, and the same evidence can support very different decisions depending on mandate and portfolio construction. Use this guide as a structural reference, not a prescription.
Go deeper
For a stage-three deep dive, the companion framework expands due diligence into a 99-point checklist across team, product, market, traction, financial, moat, and risk.
What are the stages of the venture capital investment process?
The venture capital investment process moves through seven stages: sourcing, screening, due diligence, investment committee, term sheet and negotiation, closing, and post-investment portfolio support. Each stage has distinct activities and explicit outputs.
How long does the VC investment process typically take?
From first meeting to wired capital, the process commonly takes six to twelve weeks for early-stage rounds and longer for growth-stage transactions. Sourcing and screening can be very fast; due diligence and closing dominate the timeline.
What is the role of the investment committee?
The investment committee is the formal decision body of the fund. It pressure-tests the sponsor partner's thesis, surfaces dissent, and produces an auditable record of the decision and its conditions.
How does this guide relate to the 99-point due diligence checklist?
This guide describes the end-to-end process. The 99-point due diligence checklist drills into the third stage, due diligence, with a structured framework across team, product, market, traction, financial, moat, and risk.
