Investment Memo: The Proven Playbook Behind Every SaaS Funding Round

Most founders think the invest­ment memo is a doc­u­ment the ven­ture cap­i­tal firm writes after they pitch. That is half the sto­ry — and the half that los­es you rounds. The invest­ment memo is the actu­al arti­fact that funds (or kills) your deal inside the part­ner­ship meet­ing, and the founders who close rounds at pre­mi­um val­u­a­tions are the ones who have already writ­ten their own ver­sion before they walk in.

This guide unpacks what an invest­ment memo real­ly is, why it exists in two par­al­lel forms (the investor’s and the founder’s), what every sec­tion of one looks like in prac­tice, and how to write your own pre-mortem memo before rais­ing — using a worked $5M annu­al recur­ring rev­enue (ARR) SaaS exam­ple so the math is real, not the­o­ret­i­cal.

The read­er who gets the most out of this is a SaaS chief exec­u­tive offi­cer (CEO) some­where between $3M and $20M ARR, prepar­ing for a Series A or B, who wants to stop being sur­prised by the ques­tions investors ask in sec­ond-round dili­gence. If that is you, the next 15 min­utes will save you 15 weeks of wan­der­ing through a fundraise with the wrong nar­ra­tive.

1. What an Investment Memo Actually Is

An invest­ment memo is a struc­tured writ­ten doc­u­ment that argues — to a spe­cif­ic audi­ence, with spe­cif­ic assump­tions — why a par­tic­u­lar com­pa­ny is or is not worth fund­ing at a par­tic­u­lar price. It exists to force a deci­sion-mak­er to rea­son on paper rather than from a slide.

Think of it like a legal brief. The pitch deck is the clos­ing argu­ment: visu­al, nar­ra­tive, designed to land emo­tion­al and intel­lec­tu­al hooks in 20 min­utes. The invest­ment memo is the brief: dense, struc­tured, sourced, and writ­ten so that a part­ner who was not in the room can still vote yes or no based pure­ly on what is on the page.

There are three rea­sons mem­os exist where decks will not do:

1. Invest­ment com­mit­tees do not all attend the pitch. A typ­i­cal Series A part­ner­ship has six to ten part­ners; only two or three may have met you. The oth­er part­ners vote based on the memo.
2. Mem­os force the dis­ci­pline of writ­ing. Slides let you skate over weak log­ic with a pret­ty chart. A para­graph that says “we believe gross mar­gin will reach 78% by year three” forces the writer to defend the path from today’s 62%.
3. Mem­os become the con­tract for account­abil­i­ty. Two years after the check clears, when the com­pa­ny miss­es a mile­stone, the part­ners pull up the orig­i­nal memo and ask: “What did we believe was going to hap­pen, and why?” That post-mortem is how funds learn — and how part­ners get pro­mot­ed or pushed out.

If you under­stand those three rea­sons, you under­stand why the memo mat­ters more than the deck. The deck gets you in the room. The memo gets you fund­ed.

2. The Two Memos Every Funding Round Generates

Every fund­ed round gen­er­ates two mem­os, writ­ten by two dif­fer­ent peo­ple, with two dif­fer­ent goals. Most founders only know one of them exists.

Memo	Author	Audi­ence	Pur­pose
Investor’s inter­nal memo	Spon­sor­ing part­ner or prin­ci­pal	The full part­ner­ship / invest­ment com­mit­tee	Argue for or against the invest­ment, sur­face risks, set ini­tial mile­stones
Founder’s pre-mortem memo	The CEO (you)	Your­self, your co-founder, your board	Stress-test the sto­ry before pitch­ing, pre­dict dili­gence ques­tions, lock the nar­ra­tive

The investor’s memo is the one that has been writ­ten about end­less­ly — Besse­mer, NfX, Sequoia, and First Round have all pub­lished tem­plates. It is the one your future board will ref­er­ence. But the founder’s memo is the one that deter­mines whether the investor’s memo turns out flat­ter­ing or fatal.

The asym­me­try mat­ters. The investor writes the memo about you with maybe 15 to 30 hours of total expo­sure to your busi­ness across pitch, fol­low-ups, and ref­er­ence calls. You have lived inside the busi­ness for five years. If you do not pre-process your own sto­ry into memo form, the part­ner has to do that trans­la­tion work in real time, against the clock, with incom­plete infor­ma­tion — and the ver­sion they ship to the part­ner­ship meet­ing will be a worse sto­ry than the one you would have writ­ten your­self.

The sin­gle high­est-lever­age fundrais­ing activ­i­ty that almost no founder does is writ­ing your own ver­sion of the memo your investor will write, and using the gaps to rehearse.

3. The 7 Sections Every Investment Memo Contains

Invest­ment mem­os vary across firms, but the bones are remark­ably con­sis­tent. After read­ing dozens of leaked and pub­lished mem­os — Sequoia’s YouTube memo, Besse­mer’s Shopi­fy memo, Roelof Both­a’s Square memo — the same sev­en sec­tions appear every time, in rough­ly the same order.

Section 1 — Executive Summary (Half a Page)

The exec­u­tive sum­ma­ry states the rec­om­men­da­tion and the price. Three to five sen­tences. This is what the part­ners read on the way to the meet­ing.

A well-writ­ten sum­ma­ry con­tains:

• The com­pa­ny name, stage, and round being raised
• The pro­posed check size and own­er­ship tar­get
• The implied pre-mon­ey and post-mon­ey val­u­a­tion
• A one-sen­tence the­sis (“We believe X is the cat­e­go­ry-defin­ing play­er in Y because of Z”)
• A one-sen­tence risk call­out (“Pri­ma­ry risk is con­cen­tra­tion — top three cus­tomers rep­re­sent 41% of ARR”)

If the rest of the memo dis­ap­peared, the part­ner­ship could vote on the sum­ma­ry alone. That is the bar.

Section 2 — Company Overview and Product

Two to three pages. What the com­pa­ny does, what the prod­uct is, who the cus­tomer is, what they pay, and what prob­lem the prod­uct solves. This is where the ide­al cus­tomer pro­file (ICP) gets named and defend­ed — not as a slide, but as a para­graph nam­ing the buy­er’s role, the buy­er’s pain, and what they were doing before this prod­uct exist­ed.

The bar for this sec­tion is bru­tal­ly sim­ple: a part­ner with no domain exper­tise should be able to read it and explain the busi­ness to their spouse over din­ner. If that is not pos­si­ble, the sec­tion is too jar­gony.

Section 3 — Market and Competition

The total address­able mar­ket (TAM) cal­cu­la­tion lives here, but more impor­tant­ly, so does the com­pet­i­tive map. Mem­os that just cite a top-down “$50B mar­ket by 2030” num­ber get marked down by sophis­ti­cat­ed part­ners. The strong mem­os build the mar­ket from the bot­tom up: num­ber of buy­ers in the ide­al cus­tomer pro­file, real­is­tic aver­age annu­al con­tract val­ue (ACV), real­is­tic pen­e­tra­tion ceil­ing.

Com­pe­ti­tion gets han­dled in two parts: who else does the buy­er eval­u­ate, and why does this com­pa­ny win or lose those bake-offs? “We have no com­peti­tors” is a red flag — it means either the writer has not done the work or the mar­ket does not exist yet.

Section 4 — Traction and Metrics

This is where the memo lives or dies. Investors are pat­tern-match­ing against bench­marks for your stage. Every Series A SaaS memo I have seen sur­faces the same met­rics in the same order:

• ARR (cur­rent, year-ago, pro­ject­ed end-of-year)
• Net new ARR by quar­ter for the last 6–8 quar­ters
• Net rev­enue reten­tion (NRR) and gross rev­enue reten­tion (GRR)
• Logo reten­tion and aver­age rev­enue per account
• Cus­tomer life­time val­ue to cus­tomer acqui­si­tion cost ratio (LTV:CAC), with the inputs shown
• CAC pay­back peri­od in months
• Mag­ic Num­ber or sales effi­cien­cy ratio for the last 4 quar­ters (see SaaS Mag­ic Num­ber)
• Gross mar­gin trend
• Burn mul­ti­ple (net burn ÷ net new ARR)

If your memo can­not pro­duce all 9 of those num­bers clean­ly, you are not ready to raise. Investors will pro­duce them any­way in dili­gence — and the ver­sion they pro­duce, work­ing from your raw data exports, will be ugli­er than the one you would have pro­duced from a clean dash­board.

Section 5 — Team

The team sec­tion is where dis­pas­sion­ate analy­sis breaks down. Part­ners write in code. “Repeat founder” means good. “First-time CEO” means good if rev­enue is grow­ing, risk if it is not. “Strong tech­ni­cal co-founder” means the part­ner could not get a clean read on the busi­ness co-founder. “Pas­sion­ate about the space” almost always means there is no sec­ond rea­son to back this team.

Read team sec­tions back­wards. What is not said is the sig­nal. If the sec­tion names the CTO and the chief rev­enue offi­cer (CRO) but not the chief finan­cial offi­cer (CFO), the part­ner is flag­ging a CFO gap. If the sec­tion talks about the CEO’s pri­or exit but not the cur­rent team’s indus­try expe­ri­ence, the part­ner is flag­ging that the CEO is the only oper­a­tor with cat­e­go­ry knowl­edge.

Section 6 — Financials and Use of Funds

This sec­tion answers three ques­tions: what does the next 24 months cost, what mile­stones does the com­pa­ny hit on that spend, and what does the com­pa­ny need to be true to raise the next round at a step-up val­u­a­tion.

The strong mem­os include a mile­stone-based run­way table:

Mile­stone	Tar­get Date	Cur­rent vs. Tar­get	Cap­i­tal Required
Hit $10M ARR	Q4 next year	$5.2M today, grow­ing 90% YoY	~$8M of the round
Land 3 enter­prise logos >$250K ACV	Q2 next year	1 today, 4 in active pipeline	includ­ed above
NRR sus­tained ≥115%	Trail­ing 4 quar­ters	118% TTM	includ­ed above
Move CAC pay­back below 18 months	End of next year	24 months today	$1.5M of round

A memo with a mile­stone table this spe­cif­ic is a memo where the part­ner is con­fi­dent. A memo with vague phras­es like “invest­ing in growth” is a memo where the part­ner could not get the founder to com­mit.

Section 7 — Risks and Open Questions

Every memo lists three to five risks. The part­ners debate each one. The strongest founders give their investors the risks them­selves, with mit­i­ga­tions attached, before being asked.

Com­mon risks for a Series A SaaS:

• Con­cen­tra­tion risk (top 5 cus­tomers >30% of ARR)
• Sales-led ver­sus prod­uct-led ten­sion
• Gross mar­gin path under heavy infra­struc­ture costs
• Com­pet­i­tive threat from a strate­gic incum­bent
• Depen­den­cy on a sin­gle chan­nel (paid search, part­ner­ships, out­bound)

What is not a real risk call­out: “exe­cu­tion risk.” Every invest­ment has exe­cu­tion risk. A memo that lists it is admit­ting the writer ran out of spe­cif­ic con­cerns.

4. The Investor’s Internal Memo: What’s Really Being Decided

The mechan­ics inside a ven­ture cap­i­tal part­ner­ship are more polit­i­cal than founders real­ize. The part­ner­ship meet­ing is not a neu­tral pan­el review­ing a memo. It is a room of peo­ple with their own port­fo­lios, their own missed deals, their own pat­tern-match scars, and their own re-invest­ment pres­sure on exist­ing com­pa­nies.

The spon­sor­ing part­ner — the one who met you, cham­pi­oned you, and wrote the memo — is putting rep­u­ta­tion­al cap­i­tal on the line. Their job inside the meet­ing is to antic­i­pate every objec­tion their col­leagues will raise and pre-answer it in the memo. If they fail, the deal dies in com­mit­tee. If they suc­ceed, the deal clos­es the same week.

This is why the mem­o­’s risk sec­tion is often the most impor­tant sec­tion. The spon­sor­ing part­ner is not list­ing risks for you to know about. They are list­ing risks because they know oth­er part­ners will ask, and the strongest move is to sur­face the ques­tion and answer it before it can be used against the deal.

What this means for you, the founder: when an investor asks you a hard ques­tion in dili­gence, they are not nec­es­sar­i­ly skep­ti­cal. They are gath­er­ing evi­dence so they can defend the deal in their own part­ner­ship meet­ing. Help them. Your job in late-stage dili­gence is not to look per­fect. It is to give the spon­sor­ing part­ner the ammu­ni­tion to win the inter­nal argu­ment on your behalf.

The read­er who treats dili­gence as a test fails it. The read­er who treats dili­gence as a co-writ­ing exer­cise — co-writ­ing the memo with the part­ner — clos­es rounds.

What Partners Look For Beyond the Numbers

Three sig­nals tend to swing part­ner­ship meet­ings beyond what the met­rics show:

1. Founder learn­ing rate. Has the CEO’s men­tal mod­el of the busi­ness sharp­ened across the dili­gence process? Part­ners take notes after the first call and the fourth call. If the founder’s answers are vis­i­bly more pre­cise across that span, part­ners read it as a learn­ing rate sig­nal — and learn­ing rate pre­dicts exe­cu­tion out­comes more reli­ably than any sin­gle met­ric.
2. Qual­i­ty of the cus­tomer con­ver­sa­tions. When the part­ner calls 5 of your cus­tomers, they are not ask­ing “do you like the prod­uct.” They are ask­ing “what would you do if this prod­uct dis­ap­peared tomor­row.” If the answers clus­ter around “we’d be in real trou­ble,” the deal clos­es. If they clus­ter around “we’d find a workaround,” it does not.
3. Coher­ence between your fore­cast and your unit eco­nom­ics. Fore­casts that imply step-changes in con­ver­sion or LTV:CAC with­out a stat­ed mech­a­nism get marked down. Fore­casts that lad­der clean­ly from observed cus­tomer behav­ior get marked up.

You can man­age all three, but only if you know they are being mea­sured.

5. The Founder’s Pre-Mortem Memo: Writing Your Own Before You Pitch

Here is the prac­ti­cal work. Two weeks before you start your raise, sit down with your co-founder for two days and write the memo your investor will write about you.

Write it in their voice. Use their tem­plate (Besse­mer’s, NfX’s, and Sequoia’s are all pub­lic). Include the exec­u­tive sum­ma­ry, the sev­en sec­tions, and the risk call­outs. Be hon­est. The point of this exer­cise is not the doc­u­ment. The point is the gaps it forces you to con­front.

After you write it, run a five-step pre-mortem:

Step 1 — Identify the Three Risks You Wrote Down That Scare You

High­light the risks that, if a part­ner pushed on them in the meet­ing, would tank the deal. These are your real risks. Every­thing else is noise.

Step 2 — Pre-Build Mitigations for Those Three Risks

For each one, write a one-para­graph mit­i­ga­tion. “Cus­tomer con­cen­tra­tion: we are fore­cast­ing top-five con­cen­tra­tion to drop from 41% to 28% by year-end based on three named accounts in late-stage pipeline (X, Y, Z, total­ing $1.4M ACV).” Speci­fici­ty is the cur­ren­cy of cred­i­bil­i­ty.

Step 3 — Pressure-Test the Numbers

Take every met­ric in your memo and walk it back to the source data. Can you pro­duce the spread­sheet? Can you pro­duce the cus­tomer-lev­el cohort? Can you defend every num­ber against a hos­tile ques­tion? If not, that num­ber does not belong in the memo until you can.

Step 4 — Run the Customer Reference Test

Pick five cus­tomers you would not put on a ref­er­ence call list and write down what they would say if a part­ner reached them any­way. (Investors will some­times do off-list ref­er­ences through their net­work. Assume they will.) If the off-list answers are mate­ri­al­ly dif­fer­ent from the on-list answers, the gap is the real sto­ry — and part­ners will find it.

Step 5 — Lock the Narrative

The memo you write becomes the script. Every con­ver­sa­tion, every dili­gence call, every fol­low-up email rein­forces the same the­sis. Founders who change the sto­ry across con­ver­sa­tions — even sub­tly — get marked down on what part­ners call “sto­ry drift,” which is a polite way of say­ing the founder has not fig­ured out what they actu­al­ly believe.

The read­er who com­pletes this five-step exer­cise rais­es faster, at high­er prices, with clean­er term sheets. The read­er who skips it walks into part­ner­ship meet­ings being sum­ma­rized by some­one they have known for three weeks.

6. A Worked Example: $5M ARR SaaS Investment Memo

Con­crete is more use­ful than abstract. Here is a stripped-down founder’s pre-mortem memo for a hypo­thet­i­cal Series A SaaS.

Note on the num­bers: The fig­ures below are illus­tra­tive and reflect typ­i­cal Series A SaaS bench­marks. They are includ­ed to show the rel­a­tive shape of a cred­i­ble memo, not to imply that any spe­cif­ic num­ber is cur­rent-mar­ket for your deal. Always bench­mark against cur­rent data before lock­ing your own memo.

Com­pa­ny: Vec­tor Ana­lyt­ics Stage: Series A Round: $12M at $48M post-mon­ey (pre-mon­ey $36M, ~25% dilu­tion) Lead: Hypo­thet­i­cal Cap­i­tal Part­ners

Executive Summary

Vec­tor Ana­lyt­ics is a cat­e­go­ry-defin­ing work­flow ana­lyt­ics plat­form for B2B pro­cure­ment teams. The com­pa­ny has grown from $2.7M ARR to $5.2M ARR over the trail­ing 12 months — 93% year-over-year — with 124% net rev­enue reten­tion and a 28-month gross-prof­it CAC pay­back. We rec­om­mend lead­ing the $12M Series A at $48M post-mon­ey.

Pri­ma­ry risk is sales con­cen­tra­tion — top three cus­tomers rep­re­sent 38% of ARR. Mit­i­ga­tion: 4 enter­prise oppor­tu­ni­ties >$250K ACV are in late-stage pipeline.

Traction Metrics (Trailing 12 Months)

Met­ric	Val­ue	Series A Bench­mark	Read
ARR	$5.2M	$3M–$10M	In range
YoY ARR growth	90%	80%–120%	In range
Net rev­enue reten­tion	124%	110%+	Strong
Gross rev­enue reten­tion	91%	90%+	In range
LTV:CAC	4.6 : 1	3:1+	Strong
CAC pay­back (months, gross prof­it)	28.8	18–30	In range
Gross mar­gin	76%	75%+	In range
Mag­ic Num­ber (TTM)	0.9	0.7+	Strong
Burn mul­ti­ple	1.4	<2	Strong

LTV:CAC — The Math Shown

This is the sec­tion every investor will check. So show the work in the memo.

• Aver­age rev­enue per account (ARPA): $52,000 / year
• Gross mar­gin: 76%
• Annu­al gross prof­it per account: $52,000 × 0.76 = $39,520
• Gross rev­enue reten­tion: 91% → annu­al cus­tomer churn ≈ 9%
• Cus­tomer life­time (years): 1 / 0.09 = ~11.1 years
• Cus­tomer life­time val­ue (LTV): $39,520 × 11.1 = ~$438,672
• Blend­ed cus­tomer acqui­si­tion cost (CAC): $95,000
• LTV:CAC ratio: $438,672 / $95,000 ≈ 4.6 : 1

A part­ner read­ing this can red­erive every num­ber in 90 sec­onds. That is the point. Mem­os that show the math get believed. Mem­os that just claim “LTV:CAC of 4.6” get ques­tioned.

CAC Payback — The Math Shown

• Blend­ed CAC: $95,000
• Month­ly gross prof­it per account: $39,520 / 12 = $3,293
• CAC pay­back (months): $95,000 / $3,293 ≈ 28.8 months at gross prof­it

Note that this is the strict gross-prof­it pay­back — CAC divid­ed by month­ly gross prof­it per account, with no growth-in-peri­od or con­tri­bu­tion-mar­gin adjust­ments. Some dash­boards cal­cu­late pay­back dif­fer­ent­ly (using new-ARR con­tri­bu­tion mar­gin, or net rev­enue rather than gross prof­it), and a memo claim­ing 14- or 18-month pay­back should always include a foot­note stat­ing the for­mu­la. The num­ber itself mat­ters less than the con­sis­ten­cy between the for­mu­la and the inputs. Investors who notice mis­match­es in the cal­cu­la­tion usu­al­ly con­clude the founder does not know which ver­sion their finance team is report­ing — which becomes a CFO-qual­i­ty flag, not just a met­ric flag.

Use of Funds

Allo­ca­tion	Amount	Mile­stone
Sales & mar­ket­ing	$7.0M	Reach $12M ARR by Q4 next year
Engi­neer­ing	$3.0M	Ship enter­prise SSO + audit log; close 5 named enter­prise logos
G&A and run­way	$2.0M	Fund 24 months at planned burn
Total	$12.0M	24-month run­way to Series B at $20M+ ARR

Risks

1. Cus­tomer con­cen­tra­tion. Top three cus­tomers = 38% of ARR. Mit­i­ga­tion: 4 late-stage enter­prise oppor­tu­ni­ties >$250K ACV total­ing $1.4M of pipeline ARR.
2. CAC infla­tion in paid chan­nels. Cost per qual­i­fied lead has risen 35% in the last two quar­ters. Mit­i­ga­tion: out­bound and part­ner chan­nel hires (3 reps, 1 part­ner man­ag­er) fund­ed out of this round to diver­si­fy.
3. Founder oper­at­ing gap as we scale past $10M ARR. Cur­rent CEO has not pre­vi­ous­ly run a $20M+ ARR busi­ness. Mit­i­ga­tion: bring on a chief rev­enue offi­cer with pri­or enter­prise scal­ing expe­ri­ence by Q2 next year (search active).

This is the ver­sion of the memo Vec­tor Ana­lyt­ic­s’s founder writes before the pitch. The investor’s memo will look sur­pris­ing­ly sim­i­lar — except the founder will not be sur­prised by what is in it.

7. The 5 Mistakes That Kill Investment Memos

After enough cycles, the same memo fail­ures show up over and over. Avoid them.

Mistake 1 — Top-Down TAM Without Bottom-Up Defense

A memo that cites “$50B mar­ket by 2030” with­out nam­ing the buy­er count, the real­is­tic ACV, and the real­is­tic pen­e­tra­tion ceil­ing tells the part­ner the writer is shop­ping a slide rather than a the­sis. Top-down TAM is fine as a san­i­ty check. Bot­tom-up TAM is the work.

Mistake 2 — Magic Number, LTV:CAC, or Burn Multiple Without the Inputs

Every met­ric in a memo should be repro­ducible from the inputs in the memo. If the part­ner has to ask “how did you get LTV?” the memo los­es cred­i­bil­i­ty. Show the for­mu­la. Show the inputs. Show the peri­od.

Mistake 3 — A Forecast That Implies a Step-Change With No Mechanism

If your his­tor­i­cal CAC pay­back is 24 months and your fore­cast assumes 14 months by year three, the memo must explain why — a new chan­nel, a pric­ing change, an enter­prise motion that improves blend­ed ARPA. Fore­casts with­out mech­a­nisms are wish­ful think­ing, and part­ners are paid to spot wish­ful think­ing.

Mistake 4 — A Risk Section That Lists “Execution Risk”

Every invest­ment has exe­cu­tion risk. List­ing it admits the writer could not name the spe­cif­ic con­cern. Replace it with a real, spe­cif­ic, mit­i­gat­ed risk — con­cen­tra­tion, chan­nel depen­den­cy, founder gap, reg­u­la­to­ry expo­sure, tech­ni­cal debt. Speci­fici­ty is cred­i­bil­i­ty.

Mistake 5 — A Memo That Tells a Different Story Than the Pitch

The memo and the pitch must agree on the the­sis, the met­rics, the mile­stones, and the risks. When they dis­agree — even sub­tly — part­ners read it as sto­ry drift, which is the sin­gle most dam­ag­ing sig­nal in late-stage dili­gence. Lock the memo first; build the deck against the memo.

8. Investment Memo vs. Pitch Deck vs. Term Sheet

Founders blur these three arti­facts. They are dif­fer­ent objects with dif­fer­ent jobs.

Arti­fact	Author	Audi­ence	Length	Job
Pitch deck	Founder	Investor in pitch meet­ing	12–18 slides	Win the next meet­ing
Invest­ment memo	Investor (or founder, pre-pitch)	Invest­ment com­mit­tee	8–15 pages	Win the part­ner­ship vote
Term sheet	Investor	Founder + lawyers	3–6 pages	Lock the deal eco­nom­ics and gov­er­nance

The deck sells the sto­ry. The memo sells the deci­sion. The term sheet sells the terms. A founder who walks in with only a deck is let­ting the investor write the memo with­out input. A founder who walks in with their own memo is mak­ing the part­ner­ship meet­ing much eas­i­er for the spon­sor­ing part­ner — which is the eas­i­est way to con­vert a tepid yes into a strong yes.

Relat­ed read­ing: if you are still decid­ing whether you should be rais­ing ven­ture at all, see SaaS ven­ture cap­i­tal and ven­ture cap­i­tal vs. boot­strap­ping before you write the memo. If ven­ture is wrong for your stage, ven­ture debt may serve you bet­ter. And if exit is on the hori­zon rather than anoth­er raise, the SaaS exit strat­e­gy frame­work gives you the same arti­fact-by-arti­fact treat­ment for the sale process.

9. Frequently Asked Questions

How long should an investment memo be?

Eight to fif­teen pages, sin­gle-spaced. Short­er than that, and the memo is too thin to defend in com­mit­tee. Longer than that, and part­ners stop read­ing. Besse­mer’s pub­lished mem­os hov­er around ten to twelve pages; Sequoia’s leaked YouTube memo was famous­ly short (six pages) but had a the­sis that wrote itself.

Should the founder send the investor an unsolicited investment memo?

No, not in that for­mat. Send a tight the­sis doc­u­ment — two to three pages — that pre-answers the ques­tions the part­ner will need to defend the deal. The full pre-mortem memo is for your inter­nal use, to sharp­en the nar­ra­tive before the meet­ing. Send­ing it as-is can come across as pre­sump­tu­ous.

How is an investment memo different from a one-pager or a deal teaser?

A one-pager is the lure: name, stage, trac­tion head­line, ask. A deal teas­er (used in merg­ers and acqui­si­tions, M&A) is sim­i­lar — anonymized, designed to attract ini­tial inter­est. The invest­ment memo is the full argu­ment that runs after inter­est is estab­lished and dili­gence is open.

Do angel investors write investment memos?

Some do, espe­cial­ly solo cap­i­tal­ists and angel groups that vote col­lec­tive­ly. Most indi­vid­ual angels do not — they decide on con­vic­tion in the founder. But if you are pitch­ing an angel syn­di­cate (Angel­List syn­di­cates, for exam­ple), the lead syn­di­ca­tor writes a short memo for the syn­di­cate par­tic­i­pants, and that memo fol­lows the same sev­en-sec­tion struc­ture in com­pressed form.

How does the investment memo connect to the term sheet?

The memo jus­ti­fies the price and terms; the term sheet cod­i­fies them. Specif­i­cal­ly, the use-of-funds and mile­stone tables in the memo trans­late into board com­po­si­tion, mile­stone-based vest­ing, and pro­tec­tive pro­vi­sions in the term sheet. A founder who skips the memo work often gets sur­prised by terms in the sheet that fol­low log­i­cal­ly from a memo argu­ment they nev­er saw.

What should I do if the investor refuses to share their memo with me after the round?

Most won’t. The memo is inter­nal and con­tains analy­sis the part­ner­ship does not want shared. What you can request is a debrief con­ver­sa­tion about the the­sis, the mile­stones the part­ner­ship will hold you to, and the met­rics they want to see at each board meet­ing. That con­ver­sa­tion extracts the parts of the memo that mat­ter for the oper­at­ing rela­tion­ship, with­out requir­ing the part­ner to share the doc­u­ment itself.

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The invest­ment memo is the sin­gle high­est-lever­age doc­u­ment in a fundraise, and it is the one most founders nev­er write. Spend two days writ­ing your own before your next raise. The memo you would not want to write is exact­ly the memo you most need to write.