In an ideal world every partner at a VC fund would spend considerable time evaluating each startup that they invest in. This would enable the fund to benefit from the diverse perspectives and experiences that the various members of the partnership bring to bear, ultimately enabling the partnership to make better investment decisions.

However, evaluating a business takes a lot of time and is an accretive process. As a partner learns more about a company they are more likely to uncover investment risks. As a result, it is critical for there to be continuity in the due diligence process X VCs want the same person digging deeper and deeper. If every partner was trying to become a specialist on the same company, the firm wouldn't be able to evaluate many companies.

Given all of this, in a world where the only goal is to make the absolute best investment decisions every time, it would be optimal for every partner of a VC fund to focus all of their time on the same deal until they are ready to invest. Unfortunately, that's not realistic because each venture fund needs to deploy a target amount of capital in a given time period in order to meet their investor's expectations. In order to meet these expectations, partnerships collectively need to evaluate numerous businesses at any given time. As a result, in order to make enough high quality investments in a given time period firms "divide and conquer".

This dynamic has led to the creation of a few different decision making models which I have described below. It is worth noting that not every fund's decision making model will fit cleanly into one of these categories, however, this framework should give entrepreneurs a way to think about how a fund's decisions are made:...