Investment Memorandum Template
Congratulations. If you’re downloading this investment memorandum guide (aka IM, Investment Memo, Memorandum of Investment or MOI), you’re gearing up to pitch to and secure investment.
What is an Investment Memorandum?
An IM is designed to make it easy for you to attract investors. It should summarise what you are offering to an investor and what they will be investing in, in an easy-to-read document (with a few attachments as evidence).
An IM is not a Business Plan.
Your business plan will outline how you will achieve your goals and what you need to do when, where and with whom (and what finance). If your business plan highlights the need for an injection of capital in order to scale, you may need to raise funds via an investment round - and therefore, draft an IM.
Pitch Deck then IM
To secure investment funds, an investor will want you to pitch them your concept, demonstrate your early traction and outline your strategy for growth. This detail should be covered in your pitch deck and a leave-behind version of the pitch deck with slightly more detail.
If you’re successful at the pitch round, an investor will then ask you for more detailed information: typically summarised in the form of an IM which includes your:
offer in exchange for funds
detailed information on your company structure and shareholders,
an introduction to your solution
a summary of your business plan including the team who’s executing the plan
details about your customers; finances; operating structure and intellectual property strategy; and
how you will spend any funds raised
Organise a Data Room
Because you’re likely to be pitching to multiple investors with different offers and asks at the same time, it’s best to organise these files in separate data rooms and share that folder with each investor.
A data room is simply a digital storeroom. There are specialised data room SaaS platforms available but these are best suited to high value rounds or high volume investment managers. For startups, Google Drive, Dropbox, Sharepoint all work well as data rooms as they allow you to securely share documents and control access to the folders with tiered permissions. With digital data rooms you can also track who’s clicking on links and remove access when required.
How to use this Investment Memorandum template
This template is yours to tailor further. Be sure to replace the logo and update the fonts and colours to suit your brand.
We recommend not making too many changes to the structure of the document - it has been designed to use as is with a flow investment teams analysing your business will expect to see:
Your offer to investors
The value of the opportunity
Your product/solution
Key metrics to-date
How you will scale and adapt as you win
Your ability to execute
Addenda - including a list of expected documents to attach to your IM and make available via your data room
What to expect in Due Diligence
Securing funds can take some time - investor due diligence (“DD”) can take anywhere from a month (rare) to 12 months to complete and is an important process for both your prospective investor and yourself.
Depending on your investor, DD usually comprises multiple stages, starting with the pitch deck, initial scan, detailed due diligence, offer and negotiation of terms, and finally, if you accept, there’s the investment agreement, background checks, funds transfer and share issuance.
The more organised you are, the less stressful the process will be (and potentially faster to that cheque!) Here’s our top tips to ensure a smooth due diligence process:
Complete your IM and assemble the above information
Create a data room to store and organise your files
Share the data room with specific people only - don’t allow anyone with this link can access permissions - so new viewers need to request access and you know who’s accessing your commercial-in-confidence information
Update your prospective investor with key milestones achieved or any tasks they’ve asked you to complete via email - this shows your ability to get stuff done
Update financial information and customer case studies as you progress throughout the year
If you pass an investor’s due diligence stage, they’ll typically invite you to meet and discuss high level terms. They will provide a Term Sheet and letter of offer and negotiations can begin.
If you accept their offer and terms you’ll sign an investment agreement and depending on the size of the cheque and investor, will need to complete anti-money laundering and Know Your Customer finance background checks.
Once complete, funds will be transferred and certificates of shares will be issued.
Get Started on your IM
Ready to draft your own investment memorandum? Open the editable template (opens Google Docs) and save your own copy.
Best of luck!
