The New Diligence Frontier: What LPs Are Asking in 2026
The Strut team recently went to New York to host an intimate LP breakfast. We’re sharing the top three takeaways from the “Diligence Beyond the Checklist” LP panel that took place as part of the event.
The panel brought together four distinct vantage points:
A global alternatives advisor (Albourne)
An institutional fund-of-funds IC voice (Accolade)
An emerging manager (Dorm Room Fund)
A representative who runs diligence calls on behalf of clients (Aduro)
Despite very different seats at the table, there was surprising alignment among them.
1. Diligence is about finding control gaps, not just information-gathering.
LPs are rarely trying to “collect more data.” They are trying to test judgment, governance instincts, and decision quality.
Albourne emphasized that across fund sizes, the core risks LPs are probing tend to be aligned with risk areas commonly found across the asset classes, including information security and duty segregation. LPs are also interested in emerging topics (such as AI) and their potential impact on operations. The packaging of those questions may evolve, but the underlying risks that diligence providers are looking for are generally consistent.
Accolade added an important IC lens: many diligence inputs inform discussion, but relatively few actually change outcomes. When something shifts a decision, it isn’t because a spreadsheet tab was missing; rather, the discovery revealed a misalignment in incentives, governance gaps, or an unexamined risk.
In other words, more documentation does not automatically produce better underwriting. In some cases, it produces the illusion of precision.
Implication: The goal of diligence is sharper judgment and informed decision-making, not needlessly thick data rooms.
2. For emerging managers, operational credibility is about transparency and the path to improvement, not infrastructure density.
A key distinction throughout the panel was that early-stage firms are not being judged against fully built institutional platforms, but instead, on their credibility. Credibility, especially for lean teams, does not necessarily mean having everything built. It means building a framework within their control, being honest and aware of operational shortcomings, and having a plan to scale alongside the firm’s growth.
From Aduro’s vantage point, when handling diligence calls on behalf of clients, one pattern stands out clearly: LP confidence often increases when a GP is transparent about limitations.
If a manager says:
“We don’t yet have X built out.”
“Here’s why it hasn’t been necessary at this stage.”
“Here’s the trigger point when we will implement it.”
“Here’s who we’ve identified to support it.”
That transparency is far more reassuring than trying to mask the gap or referencing processes that do not actually exist in practice. Attempting to over-engineer infrastructure before it’s truly needed rarely reduces risk. In some cases, it can actually create new risks, because systems exist only on paper, not in muscle memory.
Looking through an operational due diligence lens, some inherent operational gaps are common for young firms; but with this understanding, investors are also looking for incremental gaps among emerging managers that can be reasonably addressed, either now or in the near future. This can, for example, take the form of governance alignment, on-market fund terms, and thoughtful conflict management. Not in whether a young firm has a 10-person compliance team. What Albourne sees as key is that they give managers active feedback, providing the ability to address areas of concern.
From the GP side, Dorm Room Fund echoed that some diligence inputs genuinely improved the firm, especially around documentation and governance clarity. But other requests were clearly driven by institutional defensibility rather than predictive value.
The important distinction is this:
Emerging managers are not expected to look like $2B AUM platforms.
They are expected to demonstrate ownership, awareness, and intentionality.
For lean teams, operational credibility is less about infrastructure density and more about the maturity of thinking.
Implication: LPs should assess whether a gap is an unmanaged risk or simply a stage-appropriate evolution. GPs should resist the urge to overbuild and instead articulate clearly what exists, what does not, and why.
3. Calibration should reflect fund type, not become a proxy for lower standards.
One of the most productive tensions in the discussion centered on calibration.
Institutional LPs acknowledged that expectations must flex for emerging managers. But that doesn’t mean lowering the bar; it means focusing on the right risks.
Accolade emphasized that underwriting questions do not fundamentally change between emerging and established managers. What changes is how evidence shows up. A first-time fund cannot demonstrate a 15-year track record, but it can demonstrate disciplined process, ownership thinking, and governance maturity.
From the GP side, there was recognition that when LPs say they are “calibrating,” managers often assume LPs are worried about durability, team cohesion, and downside protection, not formatting or infrastructure gaps.
This connects to the broader theme of false precision. Data that appears clean and quantitative does not always reduce uncertainty. In early-stage venture especially, qualitative judgment still carries enormous weight.
Implication: Calibration should adjust for lifecycle stage, but not excuse weak fundamentals or demand institutional perfection from a small team.
The Takeaway
Across all perspectives, one idea surfaced repeatedly:
Diligence works best when it becomes governance, not a gate.
In tougher fundraising markets, GPs are more open and responsive. Several panelists noted that well-framed diligence feedback can meaningfully strengthen a firm, clarifying incentives, tightening documentation, and aligning expectations before capital is wired. Thorough diligence can offer investors a roadmap, rather than a roadblock to investment.
When used constructively, it sharpens both sides.
