What’s inside an early-stage VC investment memo?

Hi! I’m glad you’re here. You’ve made it to issue #27 of VC Demystified🪄.

My name’s Nicole - I’m a Principal at an early stage venture fund, and I know firsthand that VC can often be a black box. Breaking into the industry may feel daunting and resources can seem scarce and inaccessible. I wanted to put together a newsletter to give others the playbook I wish I had when I first started.

Today’s deep dive: An inside look at an early-stage investment memo

My personal mission is to open as many doors as possible for other people and this newsletter is just one avenue to do that. As always, I will continue to post VC insights daily across my socials for those of you who prefer those channels.

An inside look at an early-stage investment memo

Ever wondered what VCs really look at before making an early-stage investment?

Investment memos are the behind-the-scenes documents that summarize a startup's potential and make or break funding decisions.

It’s important to note that each firm is different and so are their memos so this is a generalist take on what most investment memos include.

Here's why this is important to know:

• For Founders: Knowing what goes into an investment memo helps you craft a pitch that hits all the right notes. It’s not just about the numbers; it’s about telling your story in a way that aligns with how VCs assess risk and opportunity.

• For Aspiring VCs: Understanding the components of a memo gives you insight into what experienced investors focus on. This knowledge can help you spot red flags, ask better questions, and make stronger recommendations in your interviews.

Investment memos aren’t just paperwork—they’re a blueprint that details why a startup might be the next big thing (or not). They cover everything from the company’s story and market opportunity to risks and potential rewards, laying out the case for investing.

This post will breakdown the 10 main sections of an early-stage investment memo.

Let’s get into it!

1. Executive Summary

This section gives a high-level overview of the investment opportunity. It’s a brief snapshot that answers these key questions:

• Where was the company sourced?

• What does the company do?

• When was the company founded?

• How much capital is being raised?

• Why is this a compelling investment?

The executive summary sets the stage for the rest of the memo, providing a concise overview of the business, the market opportunity, and the key reasons to invest.

2. Company Overview

The company overview dives deeper into what the startup does and its core value proposition. It typically covers:

• Problem: What is the pain point being solved?

• Product: What is the main offering?

• Business model: How does the company make money?

• Target customers: Who is the company’s ideal customer and why do they need this product?

This section also includes the company’s history, major milestones, and the story behind why it was founded.

Subscribe to Premium to read the rest.