Why a checklist is not enough
A checklist can be complete while an important question is still open: every document was requested and received, and nobody asked whether the founder actually owns the IP. The unknowns list is where those questions live, in plain sentences, until each one is answered or consciously accepted.
What each question needs
- The question itself, written so someone else could answer it. "Does the founder own the IP outright?" beats "IP".
- How much it matters. Is it blocking (the decision should not be made without it), important, or minor?
- Which decision depends on it. Screening, the committee decision, the term sheet, closing, a later follow-on. The same question can be harmless for one decision and fatal for another.
- An owner and a date, so it does not belong to everybody.
The rule for closing a question
A question closes in only three ways, and each one needs something written down.
- Answered, with a source. The answer, and where it came from: a document, a call, a named person. A bare "yes" is not an answer.
- The risk is accepted, with a reason. You go ahead without knowing, and you say why in a sentence. For a blocking question, this should be a decision for a senior partner, not a click by whoever happens to be reading the list.
- Not applicable, with a reason. It was asked in error or no longer matters.
Note what is missing: "closed" with nothing recorded. Questions that disappear without an answer are how a firm ends up surprised after the money has moved.
Keep the history
If an answer turns out to be wrong, reopen the question instead of editing it, and keep the old answer and its source in the history. A year later, "what did we believe at the time, and why?" is a fair question.
Unknown is not zero
A list with no questions does not mean nothing is unknown; it means nothing has been written down. Report it that way ("no questions recorded"), and let the committee see the open, blocking ones before it votes.
How VentureFract does it
Each deal has an Open questions section on its Diligence tab. Every question carries its importance, the decision that depends on it, an owner and an optional date. A question can only be settled with an answer and its source, or with a written reason to accept the risk or mark it not applicable; the system enforces this, so it cannot be skipped. Accepting the risk on a blocking question needs a firm admin. Reopening needs a reason and keeps the earlier answer in the history. The committee checklist on the IC memo tab has a rule for it: it stays blocked while a blocking question for the decision is open, and says "no questions recorded" when nothing has been written down. Companies and their positions have the same list. Open questions are marked Unknown, and an answer is marked Reported, because it is a person's cited answer and not an independent check. See deal flow and IC.
This guide describes practices and what the product does today. It is not legal or investment advice.