Investment committee process: how VC committees decide

Deals are won in the partner meeting and lost in the committee. The memo is the only thing that walks from one room to the other, so it has to answer questions you won't be there to hear.

In India the stakes are real money with a paper trail. Category I venture capital funds alone held commitments of ₹52,970 crore at the end of June 2026, according to SEBI's quarterly AIF data, out of ₹17.53 lakh crore across all AIFs. Much of that money moves only after a committee says yes. If you write memos, or sit on a syndicate that votes, it helps to know how those rooms decide. The diligence underneath the memo is covered in six checks for evaluating early-stage startups; this post is about the room.

What an investment committee decides

An investment committee decides whether the fund commits money to a company, on what terms, and with what conditions. It isn't there to discover the company. It's there to test the case the deal partner brings, and the memo is that case in writing. If you leave a question unanswered on paper, the committee will assume your answer is bad. Harsh? Yes.

For a SEBI-registered AIF, the committee also carries legal weight. Regulation 20(6) of SEBI's AIF Regulations sets out the responsibilities of investment committee members who approve investment decisions. A SEBI circular of January 2021 lets a fund's investors waive 2 of those duties, but only if each investor confirms it can carry out its own due diligence. Either way, the manager stays responsible for compliance. So don't be surprised when an external member reads your risk section first. They're signing for it.

How committees vote

Committees use one of 4 rules: unanimous, unanimous less one, consensus or a simple majority. The rule decides whose objection you write for. Under a unanimous rule, the most doubtful partner holds a veto, so the memo has to win that person, not the friendliest one in the room.

The clearest evidence on vote rules is global. Paul Gompers, Will Gornall, Steven Kaplan and Ilya Strebulaev surveyed 885 venture capitalists for How Do Venture Capitalists Make Decisions?, and most respondents were in the US. It came out as an NBER working paper in 2016 and in the Journal of Financial Economics in 2020. Roughly half the funds required a unanimous partner vote for an initial investment. Another 27% used consensus or unanimous less one. Only 15% went with a majority. Indian funds don't publish their rules, so ask. Don't guess.

The same paper maps the funnel. For each deal a firm closes, it considers about 100. About 1 in 4 reach a management meeting. Roughly 1 in 3 of those reach a partner meeting, and about half of those go on to due diligence. By the time a company reaches the committee, it's survived 3 rooms already. That's why a weak memo stings: the company was probably fine.

The path a deal takes to a yes

A deal moves through 5 stages before a term sheet, and the memo grows at each one. Knowing the stages tells you when to write which section, so the committee version isn't a rushed rewrite the night before.

1. Origination. One person brings the company in. Write the one-paragraph ask now: amount, instrument, price, ownership.
2. Management meeting. Add the team section and the questions the founder couldn't answer.
3. Partner meeting. Partners raise objections. Write every one down, word for word. These become your risk section.
4. Due diligence. Answer each objection with a document: an MCA filing, a GST return, a signed contract, a reference call you made yourself.
5. Committee. The memo goes in with findings marked confirmed, open or assumed, plus the recommendation and its conditions.

Stage 3 is where memos are made. You'll hear the objections early, when there's still time for you to test them against the data room, the reference list and the SEBI or RBI filings that apply. Ignore them and they'll come back in the committee, louder, and you won't have an answer. For the section-by-section structure, use our investment memo template for India.

Write for the partner most likely to say no. Under a unanimous rule, that partner is the committee.

Why memos die in committee

Memos rarely fail because the company is bad. They fail because the committee finds a gap the memo didn't admit. Four patterns show up again and again, whether the fund sits in Mumbai, Bengaluru or Gurugram, and each one can be fixed before the meeting.

The objection nobody answered

A partner raised it 3 weeks ago, on a Tuesday call. Your memo doesn't mention it. Now it looks hidden, even if you simply forgot, and every member in the room starts wondering what else you've left out of the pages they're holding.

Numbers without a source

Revenue from the founder's spreadsheet. Market size from the deck. If you didn't trace a number to the ROC filings, a GST return, an invoice or a bank statement, label it as the founder's claim. Say so plainly. Your committee will respect you more for it.

A risk section that reads like a disclaimer

"Execution risk" and "competition" tell the committee nothing. Write each risk as the story of how this specific company could fail, and what you'd see first: the anchor client in Pune not renewing, a notice from the GST department, a co-founder who stops turning up to Monday reviews.

No dissent on the page

If someone on your deal team disagrees, put their view in the memo, with your answer. We'd go further: give the dissent its own heading. Committees trust memos that argue with themselves. They're wary of ones that don't.

What to do next

Before your next committee, find out the vote rule, list every objection from the partner meeting, and attach a document to each answer. Then read the memo as the most doubtful partner would. Would you vote yes? For the wider research on how investors choose deals, see what the research says about VC decisions.

At MyStartupValley, every startup in your dedicated workspace is evaluated on six due diligence parameters: founder verification, market sizing, cap table, legal, client agreements and compliance, with deal notes written by the MSV team. That's evidence you can lift into a memo's diligence section. See the investor workspace.

Questions

How does a venture capital investment committee make decisions?

It depends on the fund's rule. In a survey of 885 venture capitalists, mostly in the US, roughly half the funds required a unanimous vote of partners, 27% used consensus or unanimous less one, and 15% used a simple majority. Ask a fund which rule it uses before you write for it.

What does an investment committee look for in a memo?

Committee members look for the decision being asked for, the evidence behind each claim, and an honest account of what could go wrong. A memo that names the strongest objection and answers it with documents tends to move faster than one that only argues for the deal.

Are AIF investment committee members responsible for investment decisions in India?

SEBI's AIF Regulations, in Regulation 20(6), set out the responsibilities of investment committee members who approve investment decisions. A January 2021 SEBI circular lets a fund's investors waive two of those duties if each confirms it can carry out its own due diligence. The manager stays responsible for compliance.

Sources: Gompers, Gornall, Kaplan and Strebulaev, How Do Venture Capitalists Make Decisions?, NBER Working Paper 22587, 2016 (Journal of Financial Economics, 2020) · SEBI, Data relating to activities of Alternative Investment Funds, quarter ending 30 Jun 2026 · SEBI circular SEBI/HO/IMD/DF6/CIR/P/2021/004 via TaxGuru, 8 Jan 2021