The Step-by-Step Investor Evaluation Workflow (How VCs Decide What Moves Forward)

The Step-by-Step Investor Evaluation Workflow: How VCs Decide What Moves Forward

Most founders treat the VC evaluation process like a mysterious black box. They send a deck, wait three weeks, and get a generic "not a fit for us at this time" email. They assume the GP (General Partner) looked at every slide and just didn't "get" the vision.

The brutal truth? Your deck probably died on the screen of a 24-year-old Associate while they were waiting for an Uber. In London, New York, and Toronto, the decision-making workflow is a ruthless funnel designed to eliminate 99% of deals before they ever reach a partner’s desk. If you don't understand the "Veto Points" in this workflow, you are throwing darts in the dark. In an IC (Investment Committee) meeting, we aren't looking for reasons to say "yes"—we are looking for a single, defensible reason to say "no."

This sub pillar is part of our main Pillar 1 — How VC Pitch Decks Really Work.

The VC Lens: The Filter vs. The Champion

Investors operate in a two-stage psychological state: Filtering and Championing.

1. The Filter (The Associate/Principal): Their job is to protect the Partners' time. They are looking for "Institutional Non-Starters"—a TAM that is too small, a burn rate that is too high, or a team without "Earned Secrets."

2. The Champion (The Lead Partner): Once you pass the filter, one partner must become your "Internal Champion." They have to stake their reputation on your deal in the IC meeting.

The hidden risk we hunt for is The Narrative Gap. This is the distance between your "Top-Line Metrics" and your "Underlying Reality." If your deck shows $1M ARR but your Churn Rate is 5% monthly, the Associate will see a "Leaky Bucket" and kill the deal before it reaches the "Champion" phase.

The "Trench" Report: The $10M Deal That Died in Slack

I remember a Series A deal in San Francisco. The founder was a technical genius from a Tier-1 Canadian university. The product was revolutionary. The Associate loved it. The Principal loved it. It moved to the "Partner Deep-Dive" phase.

One Partner opened the DocSend link and spent 6 minutes on the Go-to-Market (GTM) slide. He noticed that the founder’s "Customer Acquisition Cost" (CAC) was based on a single, unscalable channel (LinkedIn ads). He posted a screenshot in the internal Slack: "This isn't a venture-scale engine; it's a temporary arbitrage. Pass."

The deal died in four minutes of Slack chatter. The founder never knew why. He thought the meeting went great. The workflow is a gauntlet of micro-decisions, and any single slide can be a terminal failure point.

The Tactical Framework: The 4-Stage "Veto" Funnel

To survive the evaluation workflow, your deck must be structured to pass through these four distinct gates:

Gate 1: The 45-Second Sniff Test (The Triage)

• Who: Junior Associate.

• The Veto: "Does this fit our mandate?" (Sector, Stage, Geography).

• The Fix: Your first 3 slides must scream Product-Market Fit and Urgency.

Gate 2: The "Model" Audit (The Deep-Dive)

• Who: Principal / Senior Associate.

• The Veto: "Do the numbers lie?"

• The Fix: Ensure your LTV/CAC, NRR, and Gross Margins are industry-standard or better. If you’re in London, emphasize Capital Efficiency. If you're in NY, emphasize Market Capture Velocity.

Gate 3: The Partner "Red-Teaming" (The Challenge)

• Who: The Lead GP.

• The Veto: "What is the 'Black Swan' that kills this company?"

• The Fix: Have an Appendix that addresses Regulatory Risk, Competitive Response, and Technical Debt.

Gate 4: The IC Vote (The Final Verdict)

• Who: The Full Investment Committee.

• The Veto: "Is this the best use of our remaining capital this quarter?"

• The Fix: This is about FOMO (Fear Of Missing Out). Your deck must show that if they don't fund you, their biggest competitor will.

Semantic Depth: The "Internal Memo" Logic

When a VC decides to move a deal forward, they write an Internal Investment Memo. If your deck is high-signal, the Associate will literally copy and paste your slides into this memo. To control the workflow, you must provide these three technical "Proof Points":

1. The "Wedge" Strategy

Don't just show a big market. Show the SOM (Serviceable Obtainable Market) and the specific "Wedge" you are using to enter it.

• Example: "We are starting with mid-market CFOs in the UK (Wedge) to automate VAT compliance, before expanding into full ERP (TAM)."

2. The Efficiency Ratio

In 2025, we are looking at the Hype-to-Value Ratio.

Burn Multiple = Net Burn

Net New ARR

If your Burn Multiple is under 1.5x, you are an "Efficiency King." If it's over 3x, you are a "Capital Burner." The workflow favors the former.

3. The "Moat" Analysis

We use the Hamilton Helmer "7 Powers" framework internally. Does your deck show Network Effects, Switching Costs, or Cornered Resources? If your only moat is "we are faster," the workflow will treat you as a feature, not a company.

Expert FAQ: The "IC Room" Secrets

Q: Do VCs talk to each other about my deck?

A: Yes. The "VC Mafia" in London, NY, and SF is real. If you tell a New York fund you have a "Term Sheet coming," they will text their friends at other NY funds to see if you're bluffing. Never lie about your workflow status.

Q: How long does the workflow actually take?

A: For a "Hot Deal," 7–10 days. For a "Standard Deal," 3–6 weeks. If it takes longer than 6 weeks, you are likely "the backup plan." Use a New Lead or a Significant Milestone to restart the clock and force a "Yes/No" decision.

Q: What is the most common reason a deal dies at the final IC?

A: Opportunity Cost. The partners agree you have a good business, but they only have one "check" left for the quarter and they’d rather save it for a "Potential 100x" deal. To fix this, your deck must prove that your Upside is mathematically higher than the average.

Q: Should I ask for feedback if they pass?

A: Yes, but don't expect the truth. VCs give "soft nos" to keep the relationship open in case you 10x next year. To get the truth, ask: "What is the one metric I need to hit for this to be a 'Yes' for you in six months?" That answer tells you exactly where you failed the current workflow.