The situation
Follow-on decisions are where institutional memory fails. The person who did the original diligence has moved on, the memo says what the fund believed but not why, and the seven things the committee was nervous about are in someone's notebook. The new round gets diligenced from scratch, or worse, not really diligenced at all because the fund already owns a piece.
What changed
The company had been in Navent since the seed. When the Series B data room opened, the fund did not create a new company; it added a section to the existing process map. Every finding from the original round was still there with its disposition. So were the four findings the committee had challenged, with the notes explaining why.
The agent's first step was not to read the new room. It was to take the original round's open concerns and, for each one, find what in the new room bore on it. Three had been resolved: the customer concentration had come down, the CTO hire had happened, the patent had been granted. Three were unchanged. One had got worse.
We would have found the churn number eventually. We would not have found it on day two, and we would not have had our own eighteen-month-old finding sitting next to it saying we had seen this coming.Partner
The one that got worse
At the seed, a finding had flagged that net revenue retention was carried by two accounts. The finding had been accepted and the memo had noted it as a risk to watch. The Series B room showed that one of those accounts had churned, and the deck's retention figure was quoted over a window that ended the month before. The agent drafted the finding with both sources cited: the old contract, the new cohort table, and the deck page.
The decision
The fund took its pro-rata, but not the super pro-rata it had been offered, and said why. The portfolio view shows the company with one open flag and the spend to date on both rounds, which came to less than an hour of a partner's time.