--- name: investment-memo-generator description: Investment memo creation combining financial analysis, document generation, and structured templates. Use when creating investment memos, pitch decks, deal summaries, or investment committee materials. --- # Investment Memo Generator Structured frameworks for creating investment memos across VC, growth equity, PE, and public markets. ## Investment Memo Structure ### Standard Memo Sections ``` INVESTMENT MEMO OUTLINE: 1. EXECUTIVE SUMMARY (1 page) - Company overview (one-liner) - Investment thesis (3-5 bullet points) - Key terms (valuation, round size, ownership) - Recommendation (invest / pass / more diligence) 2. COMPANY OVERVIEW (1-2 pages) - History and founding story - Business model and revenue streams - Product/service description - Current stage and key milestones 3. MARKET ANALYSIS (1-2 pages) - TAM / SAM / SOM sizing - Market dynamics and trends - Competitive landscape - Regulatory environment 4. INVESTMENT THESIS (1-2 pages) - Core thesis pillars (3-5) - Differentiation / moat analysis - Growth drivers - Why now? (timing catalyst) 5. FINANCIAL ANALYSIS (2-3 pages) - Historical financials summary - Key metrics and unit economics - Financial projections (base/bull/bear) - Valuation analysis 6. MANAGEMENT TEAM (1 page) - Founders and key executives - Relevant experience and track record - Gaps and hiring plan - Reference check highlights 7. RISKS AND MITIGANTS (1 page) - Key risks ranked by severity - Mitigating factors for each risk - Deal-breaker thresholds 8. TERMS AND STRUCTURE (0.5-1 page) - Proposed terms - Cap table impact - Governance rights - Liquidation preferences 9. RECOMMENDATION - Clear invest / pass recommendation - Conditions or contingencies - Next steps and timeline ``` ## Due Diligence Frameworks ### Diligence Checklist by Category | Category | Key Questions | Sources | | --- | --- | --- | | **Market** | TAM accuracy? Growth rate? Tailwinds/headwinds? | Industry reports, expert calls, census data | | **Product** | Product-market fit evidence? Defensibility? Roadmap? | Customer interviews, product demo, NPS data | | **Financial** | Revenue quality? Unit economics? Cash runway? | Financial statements, data room, QofE report | | **Team** | Founder-market fit? Key person risk? Bench depth? | Reference checks, LinkedIn, prior exits | | **Legal** | IP ownership? Litigation? Regulatory exposure? | Legal counsel review, patent search | | **Customers** | Concentration risk? Churn? Expansion revenue? | Customer calls, cohort data, NRR analysis | | **Technology** | Tech debt? Scalability? Security posture? | CTO interview, code review, SOC 2 status | ### Due Diligence Scoring Matrix ``` SCORING FRAMEWORK (1-5 scale per category): Category Weight Score Weighted ──────────────────────────────────────────────── Market Opportunity 20% ___ ___ Product Strength 20% ___ ___ Financial Health 20% ___ ___ Team Quality 15% ___ ___ Competitive Position 15% ___ ___ Risk Profile 10% ___ ___ ──────────────────────────────────────────────── TOTAL 100% ___/5.0 THRESHOLDS: 4.0-5.0: Strong invest 3.0-3.9: Conditional invest (address specific concerns) 2.0-2.9: Pass (but monitor) < 2.0: Hard pass ``` ## Financial Model Integration ### Key Metrics by Stage | Metric | Seed / Series A | Growth (B-D) | Late Stage / PE | | --- | --- | --- | --- | | Revenue | ARR, MRR | ARR growth %, NRR | Revenue, EBITDA | | Efficiency | Burn multiple | Rule of 40 | EBITDA margin | | Unit Economics | Payback period | LTV:CAC | Gross margin | | Growth | MoM growth % | YoY growth % | Organic vs. M&A | | Retention | Logo retention | Net dollar retention | Customer churn | | Cash | Runway (months) | FCF burn rate | Free cash flow | ### DCF Integration for Investment Memos ``` SIMPLIFIED DCF FOR MEMO: Projection Period: 5-7 years ──────────────────────────────────────────── Year 1 2 3 4 5 Revenue ___ ___ ___ ___ ___ EBITDA ___ ___ ___ ___ ___ UFCF ___ ___ ___ ___ ___ PV Factor ___ ___ ___ ___ ___ PV of UFCF ___ ___ ___ ___ ___ Sum PV of UFCFs: ___ PV of Terminal Value: ___ Enterprise Value: ___ (-) Net Debt: ___ Equity Value: ___ Implied per share: ___ Current price: ___ Upside / (Downside): ___% ``` ### Comparable Analysis Template ``` COMPARABLE COMPANY TABLE: Company EV/Rev EV/EBITDA P/E Growth% Margin% ──────────────────────────────────────────────────── Comp A ___ ___ ___ ___ ___ Comp B ___ ___ ___ ___ ___ Comp C ___ ___ ___ ___ ___ Comp D ___ ___ ___ ___ ___ ──────────────────────────────────────────────────── Mean ___ ___ ___ ___ ___ Median ___ ___ ___ ___ ___ Target ___ ___ ___ ___ ___ PREMIUM / DISCOUNT JUSTIFICATION: - Premium warranted if: higher growth, better margins, stronger moat - Discount warranted if: smaller scale, higher risk, less proven ``` ### LBO Returns Summary ``` LBO RETURNS TABLE: Bear Base Bull Entry Multiple ___x ___x ___x Exit Multiple ___x ___x ___x Revenue CAGR ___% ___% ___% EBITDA Exit $___ $___ $___ Equity IRR ___% ___% ___% MOIC ___x ___x ___x Cash-on-Cash ___x ___x ___x ``` ## Memo Templates by Type ### Seed / Series A Memo Focus ``` EMPHASIS AREAS: - Founder-market fit (60% of conviction at seed) - Market size and timing thesis - Product vision and early traction signals - Capital efficiency and milestone plan ACCEPTABLE GAPS: - Limited financial history - Unproven unit economics - Incomplete team (plan to hire) - No established moat yet KEY QUESTION: "Can this team build this product in this market?" ``` ### Growth Equity Memo Focus ``` EMPHASIS AREAS: - Proven product-market fit with metrics - Scalable and repeatable go-to-market - Unit economics at scale - Path to profitability or Rule of 40 REQUIRED EVIDENCE: - 12-24 months of cohort data - Net revenue retention > 110% - Improving or stable LTV:CAC - Clear use of proceeds KEY QUESTION: "Does this business scale profitably?" ``` ### PE / Buyout Memo Focus ``` EMPHASIS AREAS: - Stable, predictable cash flows - Margin expansion opportunities - Debt capacity and coverage ratios - Exit optionality (strategic, IPO, secondary) REQUIRED ANALYSIS: - Quality of Earnings (QofE) - Working capital normalization - Management incentive alignment - Integration / value creation plan KEY QUESTION: "Can we generate 20%+ IRR through operational improvement?" ``` ### Public Markets / Equity Research Focus ``` EMPHASIS AREAS: - Valuation vs. intrinsic value - Catalyst identification and timeline - Risk/reward asymmetry - Position sizing rationale REQUIRED ANALYSIS: - Multi-method valuation (DCF, comps, precedents) - Sensitivity analysis on key assumptions - Scenario-weighted expected return - Liquidity and portfolio fit KEY QUESTION: "Is the market mispricing this asset, and what unlocks value?" ``` ## Quality Checklist ### Pre-Submission Review | Check | Status | | --- | --- | | Executive summary is standalone (readable without full memo) | [ ] | | Investment thesis has 3-5 clear, testable pillars | [ ] | | TAM methodology is bottoms-up (not just top-down) | [ ] | | Financial projections have bear/base/bull scenarios | [ ] | | Risks section is honest (not just pro-forma) | [ ] | | Recommendation is clear and unambiguous | [ ] | | Sources cited for market data and claims | [ ] | | Valuation methodology is appropriate for stage | [ ] | | Cap table impact is modeled | [ ] | | Management references completed (min 3-5) | [ ] | ### Common Pitfalls ``` AVOID THESE MEMO FAILURES: 1. THESIS WITHOUT EVIDENCE Bad: "Large TAM with strong tailwinds" Good: "TAM of $12B growing 18% CAGR per Gartner 2025, driven by regulatory mandate effective 2026 (cite: HB-1234)" 2. HOCKEY STICK WITHOUT DRIVERS Bad: Revenue 5x in 3 years Good: Revenue 5x driven by: 2x ASP increase (upsell to enterprise), 1.5x customer growth (new sales hires), 1.7x NRR (product expansion) 3. RISKS WITHOUT MITIGANTS Bad: "Key person risk on founder" Good: "Key person risk mitigated by: strong VP Engineering hired Q3, documented processes, board-approved succession plan" 4. VALUATION WITHOUT CONTEXT Bad: "12x ARR is fair" Good: "12x ARR represents 20% discount to median comp (15x) justified by smaller scale but offset by 2x higher growth rate" ``` ## Memo Formatting Guidelines ``` FORMATTING STANDARDS: LENGTH: - IC memo: 8-15 pages (excl. appendix) - Deal summary: 2-3 pages - Quick screen: 1 page VISUAL HIERARCHY: - Executive summary: bold key numbers - Use tables for comparisons (not paragraphs) - Charts for trends (revenue, margins, cohorts) - Red/yellow/green for risk ratings APPENDIX ITEMS: - Detailed financial model - Full cap table - Customer reference notes - Competitive feature matrix - Org chart - Term sheet ``` ## See Also - [Finance](../finance/SKILL.md) - [Document Skills: DOCX](../document-skills/docx/SKILL.md) - [Document Skills: XLSX](../document-skills/xlsx/SKILL.md) - [Fortune 50 Business Strategy](../fortune50-business-strategy/SKILL.md)