People who have better access and understanding of the manuals than I do, have told me, that you will loose certain layers of protection should you select V NAV before flaps are fully retracted on at least our NG’s ( 800).
I am not sure if this has to with:
Climb profile during flap retraction
Speed protections
Company variations (ie, your company can specify for V NAV, min climb gradients for various faces of flight- this might be a problem during flap retraction?)
Maybe SMYD
Or what ever.
One thing he told me was: that while he was visiting Mr Boeing (½a year ago) he enquired about it, and was told that this was very far from being a simple subject, at least with the current FMC updates: 10,6 and 10,7 that we fly around with. So in the company I work for only TOGA and LVL change is allowed up to flaps fully retracted.
Not sure if this helps