Ask ten VCs to describe their due diligence process and you'll get ten slightly different answers, but underneath the variation, most European funds are running the same four stages:

• Screening

• DDQ and document collection

• Specialist review

• Final report that feeds the investment committee

What changes fund to fund is how formal each stage is, and for European funds specifically, how much specialist review has to happen before a decision can responsibly be made.

Stage 1: Screening

Screening is the fast, low-effort filter; does this deal fit the fund's thesis, stage, and check size closely enough to justify spending real time on it. Most of this happens off the back of a "submit pitch" form, pitch deck, a short call, and whatever's already visible about the founder and market.

Where it's worth being precise: screening and deal sourcing are often treated as a separate tool from due diligence, which means promoting a company from "interesting" to "under review" involves re-entering data into a second system.

That handoff is where deals quietly lose time and information, a note from the sourcing conversation that never makes it into the DDQ, a data point someone has to go find again.

Where sourcing and due diligence sit in the same platform, passing a company into DD is a status change, not a migration. Nothing gets re-typed, and whatever context was captured during sourcing carries straight into the specialist review stages below.

If a fund knows in advance that a sector carries specialist review requirements, deep tech with possible dual-use exposure, or an AI-native product, that's worth flagging at screening, not discovering three weeks into diligence when the DDQ is already out the door.

Stage 2: DDQ and Document Collection

This is where the process becomes formal. A due diligence questionnaire goes out covering financials, legal structure, cap table, IP, team, and market position, alongside a request for supporting documents — financial statements, contracts, incorporation documents, existing agreements.

For funds with standardized templates, this stage moves quickly; for funds building the questionnaire fresh each time, it's often where deals quietly stall.

Version control matters more here than it gets credit for.

A DDQ response based on a cap table that's two revisions out of date isn't just an inconvenience, it can carry through into the DD report and, eventually, into the investment memo, without anyone catching it.

Stage 3: Specialist Review

This is the stage that looks meaningfully different for a European fund than for a US one. Depending on the deal, specialist review can include:

• ESG and SFDR-aligned data collection: sustainability risk exposure, business operations practices, governance structure, and in some cases Principal Adverse Impact (PAI) data, whether because the fund is in scope of SFDR, wants a structured read on the founder's approach to these topics, or needs to report specific data points to its own LPs. See ESG Due Diligence for European VC.

• Dual-use export control screening: for deep tech, defence-adjacent, or otherwise sensitive sectors, checking whether the product or IP could fall under EU export control rules. See Dual-Use Due Diligence for Deep Tech VCs.

• Responsible AI review: for companies building or deploying AI systems, an early read on risk classification, data governance, and oversight practices under the EU AI Act. See Responsible AI Due Diligence for VCs.

• KYC/KYT and AML screening: verifying source of funds, ultimate beneficial ownership, sanctions exposure, and PEP status, particularly relevant for cross-border deals or investors with less transparent ownership structures. See KYC and KYT for VC Due Diligence.

Not every deal needs all questionnaires. But when a deal does need one or more, the mistake most funds make is running it as a bolt-on process, a separate spreadsheet, a separate email thread, a separate outsourced specialist, disconnected from the core DDQ, rather than as a parallel track feeding the same final report.

Stage 4: DD Report and Investment Committee Decision

Everything collected across stages 2 and 3 has to land somewhere usable.

That's the DD report: a structured document that pulls financial, legal, and specialist findings into a form the investment committee can actually work from, rather than a stack of raw questionnaire responses someone has to manually stitch together the night before the IC meeting.

Where multiple specialist reviews run on a single deal, ESG, dual-use, AI, KYC/KYT, the report is also where those findings get aggregated into a single risk matrix, rather than living as four disconnected assessments the IC has to mentally combine themselves.

This stage matters beyond the immediate decision, too.

A well-structured report becomes the record a GP can point back to later, whether that's for internal consistency across deals, for an LP asking how a decision was reached, or for a GP's own operational due diligence when raising a future fund. We cover this in Why Your DDQ Shouldn't Be the Final Deliverable: From Questionnaire to DD Report.

Why Sequencing Matters

A common inefficiency: treating specialist review as something that only starts after the core DDQ is fully closed out, rather than running it in parallel.

On a fund with a six-to-eight week diligence window, sequential rather than parallel review can be the difference between closing on schedule and losing a competitive deal to a fund that moved faster, not because the other fund cut corners, but because they ran ESG, dual-use, or AI review alongside the core process instead of after it.

The funds that manage this well tend to have one thing in common: the DDQ, the specialist screening, and the report generation live in the same system, so nothing has to be manually re-entered or reconciled between stages.

Common Workflow Breakdowns for European Funds

A few patterns show up repeatedly:

1. ESG data collected too late to matter. If sustainability data collection only starts after the investment thesis is largely settled, it becomes a checkbox exercise rather than a genuine input into the decision.

2. Dual-use exposure missed entirely. Generic due diligence templates, especially ones built for a US audience, simply don't prompt for it — so it only surfaces if someone on the team happens to think to ask.

3. No LP-ready output. The diligence work happens, the decision gets made, but nothing structured survives the process — so when an LP later asks to see the fund's diligence approach, there's nothing consistent to show them.

Each of these is a process gap, not a rigor gap, the diligence is being done, it's just not being captured in a form that holds up later. That's the specific problem structured due diligence software is meant to solve.