Underwriting

Definition

Underwriting analyzes the fundamentals of an investment: business quality, competitive position, financial structure, valuation, scenario outcomes, and execution risks. In private markets, underwriting also includes governance rights, legal terms, and operational diligence, because information is less standardized than in public markets. Allocator Context Allocators evaluate managers based on underwriting discipline and repeatability. Strong underwriting is reflected in consistent investment memos, clear decision criteria, and post-investment monitoring frameworks. Weak underwriting often shows up as narrative-driven deals, unclear downside planning, or inconsistent sizing. Decision Authority Underwriting quality is assessed during due diligence and is a core factor in IC approvals. For direct and co-invest exposures, allocators may require visibility into underwriting methodology and assumptions. Why It Matters for Fundraising Managers who can demonstrate underwriting discipline—how decisions are made, how downside is controlled, what breaks a deal—earn allocator confidence. This matters especially when markets shift and outcomes are stressed. Key Takeaways Defines how risk and return are evaluated Discipline matters more than storytelling Downside scenarios are central to allocator trust A key diligence criterion for approvals