> For the complete documentation index, see [llms.txt](https://alludium.gitbook.io/alludium-docs/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://alludium.gitbook.io/alludium-docs/venture-capital/screening-evaluation-and-diligence.md).

# Screening, Evaluation, and Diligence

VC work moves through different evidence standards. The pack separates initial screening, focused evaluation, and formal diligence so outputs do not overstate what has actually been reviewed.

## Screening

Screening is the first investment fit check. Use it to decide whether an opportunity is worth more work.

Screening tasks can use pitch materials, source notes, public company context, fund thesis, and basic risk checks. A good screening output should identify:

* Fit with fund thesis, stage, geography, and check size
* Early positive signals
* Major red flags
* Missing materials
* Whether to pass, watch, request more information, or run evaluation

Screening should not imply that the team has completed diligence.

## Evaluation

Evaluation happens after screening and before formal diligence. Its goal is to test the opportunity's main investment hypotheses, identify gating risks, and decide what evidence is needed for a decision review.

Evaluation workstreams can cover:

* Commercial risk: market, customer, GTM, pricing, competition, and category timing
* Technical risk: product depth, technical edge, architecture plausibility, defensibility, roadmap, and team coverage
* Financial risk: forecast plausibility, burn, runway, use of funds, valuation, ownership, and return sensitivity
* Team risk: founder-market fit, role coverage, relevant experience, integrity signals, hiring gaps, and coachability

Every evaluation should end with a concrete recommendation and the next evidence request.

## Evaluation Versus Formal Diligence

| Dimension         | Evaluation                                                                                       | Formal diligence                                                                                             |
| ----------------- | ------------------------------------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------ |
| Timing            | Before decision review and term-sheet work.                                                      | After decision review, term-sheet direction, or formal diligence approval.                                   |
| Goal              | Decide whether the opportunity deserves more work.                                               | Verify claims and uncover blockers before investment.                                                        |
| Inputs            | Pitch materials, public research, calls, early data, initial model, customer or expert snippets. | Data room, company-provided files, references, legal or counsel inputs, expert review, detailed models.      |
| Output            | Current posture, central thesis question, gating risks, evidence gaps, and next evidence plan.   | Workstream report, verification status, risk register, counsel or expert questions, and approval conditions. |
| Evidence standard | Good enough to route the opportunity.                                                            | Strong enough to support investment decision conditions.                                                     |

## Formal Diligence

Formal diligence should verify claims and surface blockers. The pack includes formal diligence tasks for commercial, financial, founder, technical, and legal workstreams.

Use formal diligence tasks when the team has enough source material and approval to run deeper review. If source material is missing, the task should say so and produce the next request rather than filling the gap with assumptions.


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