Investment memo’s are written docs all VC, PE, or CVC shops produce to (i) tell a story with conviction and (ii) obtain permission to invest capital into the company. Some are 2 pages, some are 20. These memos differ by the (i) stage of the company (Seed is much different than Series B), (ii) fund you’re working at, and (iii) purpose of the memo. Yet there are several commonly covered components regardless:
1/ Executive Summary: A brief summary that gives an overview of the startup and the key reasons why it is a compelling investment opportunity (investment amount, % share, etc.). It should capture the reader’s attention and entice them to read further.
2/ Company Overview: This section provides a more detailed description of the startup, including the problem it is solving, the target market, the business model, and the competitive landscape. It may also include information on the company’s history, founding team, and any notable achievements or milestones.
3/ Market Analysis: A detailed analysis of the market and industry that the startup operates in. This may include information on the size of the market, trends and growth potential, key players, and the competitive landscape.
4/ Product or Service Description: A description of the startup’s product or service, including its features, benefits, and unique selling points. It should explain how the product or service solves the customer’s pain points and provides value.
5/ Business Model and Revenue Streams: This section explains how the startup plans to generate revenue and how it will make a profit. It should provide a clear overview of the business model, pricing strategy, and the customer acquisition and retention strategies.
6/ Financial Projections: This section includes detailed financial projections, such as revenue, expenses, and profit margins. It should also include key metrics and assumptions used in the projections, such as customer acquisition cost, customer lifetime value, and revenue growth rate.
7/ Team and Management: This section provides information on the founding team and key executives, including backgrounds and experience. It should demonstrate that the team has the necessary skills and expertise to execute.
8/ Investment Opportunity: This section outlines the investment opportunity, including the amount of funding sought, proposed use of funds, and expected return on investment. It should include information on any existing investors and the company’s valuation.
9/ Risks and Mitigation: A discussion of the associated risks and how the plans to mitigate those risks. It should be a candid assessment of the potential challenges and obstacles and how they plan to address them.
10/ Conclusion: A brief summary of the key points of the memo and a call to action for the reader to consider the investment opportunity.