Case Study
A 5-Pillar Framework for Emerging Manager Due Diligence
Integrated Investment Diligence + Operational Due Diligence (ODD)
Emerging-manager outperformance is driven less by isolated outcomes and more by repeatability - that is, the ability of a manager's edge, decision process, and operating platform to deliver results across market cycles without hidden control failures.
VeraDaniel evaluates emerging managers across five independent pillars that together assess whether performance is explainable, durable, and repeatable.
The framework integrates investment diligence and operational due diligence (ODD) into a single underwriting process, because underwriting a strategy ultimately requires underwriting the operating system that delivers it.
Typical diligence outputs include:
IC-ready memo and pillar scorecard
Risk grid and reference synthesis (triangulated pattern read)
Terms flags (alignment, governance, transparency, key-person, liquidity)
Monitoring plan (what we track, cadence, escalation logic)
Portfolio synthesis and commitment-sizing recommendation
1–2 business days
Multiple weeks (longer for multi-manager searches or program builds)
Core Objective: Reframe pedigree away from prestige and toward proof—preparedness, decision ownership, and evidence that performance is repeatable.
Decision-role clarity and accountability
Evidence of a repeatable sourcing and underwriting process
How outcomes were achieved, not just that they occurred
Discipline, focus, and platform-building behavior
Brand halo without decision ownership; access edges that do not scale.
Core Objective: Underwrite whether the strategy edge is distinctive, durable, and positioned for current and forward market conditions.
Nature of the edge (access, information, structure, underwriting insight, value creation)
Why the edge should persist at scale
What would break it (regime shifts, competition, capital crowding)
Execution repeatability and clarity of communication
Concentration risk, follow-on ambiguity, and value-add claims without evidence.
Core Objective: Determine whether the team can scale decision quality through structure, governance, incentives, and culture.
Role clarity, complementarity, and succession design
Decision governance and conflict navigation
Hiring and delegation discipline
Incentive alignment and institutional identity
Core Objective: Assess whether the GP has the operating backbone to manage capital responsibly.
Operational infrastructure, workflows, and controls
Legal, compliance, and governance in practice
Reputation, ethics, and fiduciary posture
Service-provider integration and LP-grade reporting
ODD is not optional. Treating it as separate—or outsourcing it by default—creates blind spots, particularly for emerging platforms.
Core Objective: Confirm that economics, governance, and risk discipline create a system where LP and GP win together and downside is actively managed.
Fees, offsets, key-person risk, liquidity, transparency
Functional investment committees with real accountability
Downside frameworks, thesis-invalidation tests, reserve logic
Key-person deal machines and over-reliance on financial engineering.
Early evidence, material gaps, elevated execution risk
Credible base with addressable risks
Repeatable execution supported by durable governance and scalable systems
Managers are rarely "great on average." In private markets, a single weak pillar can drive outcomes.
VeraDaniel applies minimum standards at the pillar level and treats diligence as a system test, triangulating manager narratives against data, references, and operational reality.
Diligence conclusions are translated directly into recommended commitment sizes by linking the manager's role to portfolio construction, concentration risk, pacing, and scenario sensitivity.
When your organization is designing a private-markets program or underwriting emerging managers where repeatability, governance, and risk discipline are non-negotiable, VeraDaniel applies this framework to support disciplined, defensible investment decisions.
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