Allocator Type
LP Decision Cycle
The LP Decision Cycle is the end-to-end process allocators follow to evaluate, approve, and allocate to a manager—from sourcing and screening through diligence, legal review, and investment committee approval. Understanding the cycle is key to forecasting time-to-close and improving match quality.
Allocator decisions are governed by process: screening rules, committee schedules, risk reviews, operational due diligence, and legal negotiation. Timelines vary by allocator type, but the cycle is almost always longer than GPs expect.
How allocators define the decision cycle in practice
The cycle typically includes:
- Sourcing & screen: mandate fit, capacity, initial red flags
- Initial diligence: track record, strategy, team stability
- Deep diligence: portfolio, underwriting, risk, attribution, references
- ODD & compliance: controls, valuation, ops infrastructure
- Legal & terms: LPA review, side letters, reporting commitments
- IC approval: committee cadence, conditions, and final sizing
- Onboarding: KYC, wiring, reporting set-up
Allocator framing:
“Does this fit policy and process—and can it clear governance?”
How it fits into fundraising workflows
Understanding the LP decision cycle helps:
- Predict realistic close timing
- Reduce wasted outreach to non-matching mandates
- Prepare materials in the correct order
- Avoid “rushed close” pressure that backfires
What slows decision-making
Most common blockers:
- Unclear or inconsistent track record attribution
- Weak reporting and transparency commitments
- ODD concerns (controls, valuation, compliance)
- Side letter negotiations and reporting requirements
- IC cadence constraints (meetings monthly/quarterly)
Common misconceptions
- “If they like it, they’ll move fast” → governance cadence sets pace.
- “A verbal is a commit” → many approvals die in legal/ODD.
- “Smaller allocators are always faster” → not if decision authority is fragmented.
Key allocator questions
- What is the expected timeline and what are the gating steps?
- Who are the decision-makers and what is the committee cadence?
- What conditions must be met for approval?
- What reporting/terms are required?
- What typically causes a “no” at the final stage?
Key Takeaways
- The LP decision cycle is a governance process, not a sales funnel
- Time-to-close is determined by ODD, legal, and IC cadence
- Match quality and preparation reduce cycle friction materially