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Understanding investment memos

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Entrepreneurs in early stage companies and startups typically need to engage in fundraising in order to bring their ideas into reality. They usually seek out angel investors as well as Venture capital companies to get the funds for marketing, completing purchases, and creating solid teams.

However, the businesses that have the cash to finance your company won’t make a decision based on blind faith.

This is where investment memos are useful. They assist investors in making informed decisions by providing specific information about your company’s future plans that investors will appreciate.

What is an investment memo?

Investment memos are commonly called “deal memos.” These memos present your investment philosophy and provide information on your company’s operations and the market it is operating in. Investment memos are essential tools for:

Entrepreneurs: Entrepreneurs make use of investment memos to aid in fundraising, which gives them greater chances of obtaining the money they require.

Notes to Investors enable prospective investors to exercise the due diligence required and take smart investment choices.

Nine essential elements that make up an investment memo

The investment memo you write should contain nine essential elements. These comprise:

Overview of your company: clearly outline your business’s structure and the milestones you’ve completed, as well as the milestones you are planning to reach.
Team Bios of team members. team members.
Value metrics must be thought-through to show where your company is at today, its current revenue business loan needs, and the potential market.
The problem: Clearly explain the issue that your business is solving.
The solution: Explain clearly how you can solve the issue.
Market size: Display investors the market’s overall potential by comparing the size of the market.
Product development: Describe the stage of development of your product you’re at.
Sales and distribution: Additional information on the current distribution channels and sales.
Pitch deck Slide decks that provide an easy-to-read overview of your business.

Guidelines to write an investment memo

When you draft an investment document, follow these top practices in mind

Be honest. You don’t would like to over-promise and fail to deliver with investors.
Be realistic: You’re aware your business can be a billion-dollar business However, it’s crucial for investors to have accurate projections.
Be open: Don’t try to hide information. It could cause gaps in your memo which could cause investors to doubt the credibility the investment.
Think like an investor: think about what investors would like to see when you write your memo.

A successful example of an investment memo (and the reasons why it was successful)

Airbase’s highly successful investment memo was able to help Airbase raise $60,000 within 10 days. The following are the key factors that contributed to the memo’s success:

The author didn’t concentrate on aspects that investors do not value.
The author knew that not all investors would have the same vision.
The author was honest and told their story.

Do’s and don’ts for investors who are looking to invest.

Similar to any other procedure There are correct and wrong ways to obtain the money you require. Important “do as well and do not” areas are explained in greater detail below.

Different types of financing

Do: Take the time to research the various kinds of financing available and pick one that is suitable for your company.
Don’t blindly accept funds just because it’s in the bank.

There are many different kinds of financing to think about. They are:

Non-dilutive funding: This form of financing typically is an unsecured loan and does not require you to sell equity.
Venture debt is a type of debt provided by VC companies. It is possible that you will have to forfeit certain equity.
Mezzanine fundingis a combination of equity and debt financing.
E-commerce financing: Financing specifically created to meet the needs of e-commerce.
Equity financing is the process that involves selling a share of your business.
Microlending: Get access to tiny amounts of money whenever you require it.


Your business could earn hundreds of millions in future revenue however it’s not yet there. Investors are attentive to valuation metrics. If you have a valuation that is excessive, you will not receive a loan. A low valuation can also turn investors away. Be sure that your prices are sensible, considering the current situation of your company.

Y Combinator

Y Combinator is a group that is widely regarded as the top graduate school for entrepreneurs. You should consider joining the program and following an Y Combinator approach to developing your investment memo.