Decomposing Venture: Investment Memos
Seven Reasons to Write an Investment Memo (Even If No One's Asking You To)
TLDR
Writing investment memos, even for personal use, sharpens thinking, aligns teams, creates a track record, builds LP trust, supports portfolio companies and simplifies exits. It's a key discipline for professional venture capital.
Valuable Tool
In venture capital, no official rule states you must write an investment memo. Especially in early-stage investing, decisions often happen quickly, with just a few meetings, some light diligence, a conviction call, and you're in. But skipping the memo entirely may be a missed opportunity. A memo is a valuable tool in an investor's toolkit because it allows an opportunity to clarify thinking, create alignment and build a trackable investment record.
Here are seven reasons to write one, even if you're the only one who ever reads it.
1. Sharpens Your Thinking
The process of writing forces clarity. Turning a gut feeling into a structured narrative helps investors interrogate their assumptions, identify gaps in diligence and filter through what's actually compelling (or not) about the opportunity. If you can't write it clearly, you probably don't understand it well enough to invest.
2. Prepares You to Champion the Deal
Many times, the person writing the memo is the one championing the investment internally. A strong memo arms you with crisp answers to likely questions from various stakeholders, such as partners, an investment committee or even limited partners. It helps you build your case, and pressure test it, before you're put on the spot.
3. Aligns the Team
Even in small funds, misalignment happens. One partner loves the founder; another worries about market timing or product misalignment. A memo gives everyone a shared source of truth. It highlights key assumptions, flags unknowns and helps ensure decisions are made on the same facts.
4. Creates a Track Record
Your future self may thank you. Investment memos become a record of your thinking at the time of investment. Whether a company 10x's or flames out, revisiting a memo offers insight into how your judgment is evolving and helps identify patterns over time.
5. Builds Trust with Limited Partners
When raising from new limited partners, especially more sophisticated investors, having a library of investment memos signals professionalism and process. It gives credibility to the fund and shows you take your fiduciary responsibility of their capital seriously.
6. Tool for Portfolio Support
Months after a check is written, memos serve as a reference point for supporting portfolio companies. What were their initial goals? What did you believe they needed to prove? It helps you track progress and recalibrate support based on the original thesis.
7. Makes Exits Easier to Explain
When companies exit, good or bad, memos help you tell the story. They offer narrative context for why you invested, how the company evolved and what that says about your fund's approach. This is particularly useful when reporting to limited partners or writing case studies.
Conclusion
You don't need to write a Pulitzer-worthy document. Even a few pages with clear thinking, key assumptions and a defined thesis can go a long way. Investment memos aren't about bureaucracy; they're about discipline and professionalism. And in venture, discipline and professionalism are competitive edges.
Apply
Please feel free to apply to invest via the following link.
Feedback
Please feel free to give feedback via the following link.
Subscribe
Please feel free to follow the “Decomposing Venture” series by Global Investor Hannah Savage using the “Subscribe” button below.
 | A guest post by
|