Venture Capital Investment Memo: An Investor's Template

A venture capital investment memo is the written case a deal team presents to its partnership to recommend (or reject) an investment. It summarizes the company, market, team, diligence findings, risks, deal terms and return math, and ends with a clear recommendation. No regulation requires one, but in our view it forces clear thinking and leaves a record the fund can learn from.

Definition: A venture capital investment memo (also called a deal memo or IC memo) is an internal document, commonly somewhere between 3 and 15 pages though length varies widely by firm, that states an investment thesis for a specific company, the evidence for and against it, the proposed terms, and the deal team's recommendation to the investment committee.

A good memo doesn't sell the deal. It tells the partnership what it would have to believe to do the deal.

This guide is written from the investor's side: how a VC writes the memo, what the partnership does with it, and how the return math is built. If you are a founder who wants to write your own memo before a raise, the founder-side Series A investment memo template covers that job, and the due diligence checklist shows what investors will ask you for.

Why the investment memo matters to a fund

We see the memo doing three jobs.

It disciplines the decision. Writing pushes the deal lead to separate facts from enthusiasm. The survey of 885 venture capitalists at 681 firms by Gompers, Gornall, Kaplan, and Strebulaev, fielded from November 2015 to March 2016 and published as NBER Working Paper 22587 and later in the Journal of Financial Economics, found that the average deal takes 83 days to close. The average firm spends 118 hours on due diligence over that period and calls 10 references. The memo is where those hours turn into a conclusion.
It feeds the investment committee. Partners read it before the meeting, so debate starts from shared facts. Our venture capital investment committee guide covers what happens in that room.
It creates an audit trail. Years later, the fund can compare what it believed at entry with what actually happened. That comparison is one of the few honest teachers in venture.

There are public examples. Bessemer Venture Partners publishes original memos for companies it backed, including the LinkedIn recommendation memo dated December 11, 2006, in which Jeremy Levine argued for a $12.5M Series C investment at a $237.5M pre-money valuation for about 5 percent of the fully diluted equity.

Kevin LaBuz, writing in September 2020, studied the LinkedIn, Shopify (2010), Pinterest (2011), Wix, Yelp, and Fiverr memos. He noted that they attach probabilities to different outcomes rather than forecasting one. The Pinterest memo, for instance, carried a 10 percent probability of the company imploding against a 1 percent probability of an IPO. That habit is worth stealing.

The core sections of a venture capital investment memo

Firms vary, but many memos cover similar ground in roughly this order.

Recommendation and deal summary. Amount, instrument, valuation, ownership, round size, co-investors, and board seat, all in the first paragraph.
Company overview. What the company does, for whom, and how it makes money, in plain words.
Investment thesis. Three to five reasons this could be a fund-returning outcome.
Team. Founder backgrounds, why they fit this problem, reference call findings, and gaps to fill.
Market. Bottom-up sizing, customer pain, and why now.
Product and technology. What exists today, what is defensible, and what is still a plan. For AI companies, test that claim against the AI startup moats investors still believe in.
Traction and metrics. Revenue, growth, retention, pipeline, and unit economics where they exist.
Competition. Direct and indirect alternatives, and why this company wins.
Risks and mitigants. The top risks, what diligence found, and what remains unknown.
Deal terms and return scenarios. Ownership after expected dilution, reserves, and downside, base, and upside cases.
Diligence log. Calls made, documents reviewed, and open items. Cooley GO publishes a sample VC due diligence request list that maps closely to what belongs here.

Don't skimp on section 4. The Gompers survey, as summarized on the Harvard Law School Forum on Corporate Governance, found the management team was named an important factor by 95 percent of VC firms and the single most important factor by 47 percent. It was named a factor in success by 96 percent of firms and a factor in failure by 92 percent. A thin team section, given those numbers, is usually a weak memo.

How to build the return math in an investment memo

This is where we see junior investors fall short most often. One simple structure, with illustrative numbers:

Entry. Say the fund invests $1.5M at a $15M post-money valuation for 10 percent.
Dilution. Assume future rounds dilute the stake. Carta's State of Private Markets: 2025 in Review reports that median dilution on all rounds from seed through Series C fell from about 18 percent to 16 percent. At 16 percent a round, three more rounds take 10 percent to about 5.9 percent if you do not exercise pro rata.
Exit scenarios. At a $600M exit, 5.9 percent is worth about $35.6M, roughly a 24x return. At $150M it is about $8.9M, roughly 6x. In a downside case, the fund may get back little or nothing.
Fund impact. For a $50M fund, the $600M case alone returns about 70 percent of the fund.

Then tie it to the partnership's hurdle. The NBER paper found VCs report a median required cash-on-cash multiple of 5x and an average required IRR of 31 percent, with late-stage and larger firms requiring 28 to 29 percent. A strong memo shows whether the base case clears that bar, and what has to be true for the upside to happen. For the underlying valuation logic, see the venture capital method valuation guide.

A one-page memo template you can reuse

Here is a skeleton for a first-pass memo. Expand the sections that matter most for the deal.

Recommendation: Invest / pass. $ into a $ round at $___ post-money for ___ percent.
One-sentence description: ___ helps ___ do ___ by ___.
Why this could be big (3 bullets): ___
Why this team (3 bullets): ___
Key metrics: revenue , growth , retention , burn , runway ___ months.
Top 3 risks and what we learned: ___
What we need to believe: ___
Return scenarios: downside x, base x, upside x; fund-returner exit value $.
Open questions before close: ___

If we had to keep one line, it would be "what we need to believe." It turns vague optimism into claims the committee can actually test.

Common venture capital investment memo mistakes

Committee members tend to spot these quickly:

Burying the recommendation. If a partner has to reach page four to learn the ask, the memo isn't doing its job.
Restating the pitch deck. The deck is the founder's sales document. A memo earns its place with independent evidence: customer calls, data checks, reference notes, and records like the cap table, which we read before the deck.
A weak risks section. Generic risks ("competition," "execution") with no specifics usually signal shallow diligence.
Single-point forecasts. One projected exit value hides the range of outcomes. Scenarios are more honest.
Ignoring dilution and reserves. Ownership at exit, more than at entry, drives fund returns.
No dissent recorded. Capture the strongest argument against the deal, even if the team still recommends investing.

"But at seed, nobody has time for a memo"

Fair enough. A seed round can come together in days, and a two-hour write-up feels like paperwork while a competitor sends a term sheet. Plenty of good investors run on conviction and a short email to their partners.

But the short email is still a memo. It just skips the part where you write down why you might be wrong. We'd keep it to one page if speed matters, and we'd still keep the risks and the "what we need to believe" lines. Those are the two you will want to reread in five years.

How to practice writing investment memos

Memo writing is a skill most people build by doing. One exercise: pick a company that recently announced a round, write a two-page memo from public information, and set a calendar reminder to revisit it in a year.

If you want the practice to run on something better than public information, 1752vc's Venture Fellow program supplies the inputs: eight weeks of live virtual sessions spent on case studies, real pitch materials and diligence on live companies. A memo tends to be only as good as the material behind it, and this is material a fund is acting on. Fellows earn a certification and join a network of 400+ trained Fellows across 20+ cohorts; applications are reviewed on a rolling basis. More guides are on the venture capital hub.

If you remember one thing

The memo is less about persuading the partnership today and more about being honest with the partnership of five years from now.

Anyone can write down why a deal will work.

The useful memos write down how it could fail.

Key takeaways

A venture capital investment memo is the written recommendation a deal team presents to its investment committee, covering thesis, team, market, risks, terms, and returns.
Putting the recommendation and deal terms in the first paragraph lets partners engage immediately.
A useful return section models ownership after dilution and shows downside, base, and upside scenarios against the fund's required multiple.
A specific risks section and a "what we need to believe" list tend to separate strong memos from pitch deck summaries.
Bessemer's published memos, including the December 2006 LinkedIn memo, show the value of scenario analysis and honest probability estimates.

Frequently asked questions

What is an investment memo in venture capital?

It is an internal document in which a deal team makes the case for or against investing in a specific startup. It covers the company, team, market, diligence findings, risks, terms, and expected returns, and it ends with a recommendation to the investment committee.

How long should a VC investment memo be?

There is no standard. In practice most fall somewhere between 3 and 15 pages, and length tracks the size of the check and the firm's culture: seed funds often circulate a two or three page write-up, while a large growth round gets a longer document with appendices for diligence detail. Brevity in the first page matters more than total length.

What should be included in a venture capital investment memo?

A common baseline for a venture capital investment memo: a recommendation with deal terms, a company overview, the investment thesis, team assessment, market analysis, traction, competition, risks and mitigants, return scenarios, and a diligence log. Many investors also add a short list of what the team needs to believe for the deal to work.

Do founders ever see the VC investment memo?

Usually not, because the investment memo is an internal document containing candid assessments of the team, risks and price. Some firms share parts of their thinking with founders after a decision, and a few, such as Bessemer, have published historical memos years later, once the companies became well known.

Where can I find real venture capital investment memo examples?

Bessemer Venture Partners publishes original memos on its own site for companies including LinkedIn (December 2006), Shopify (2010), Pinterest (2011), Wix, Yelp, and Fiverr. Kevin LaBuz has published a close reading of them. Reading those alongside a memo you write yourself is, in our view, one of the faster ways to learn the format.

Sources

Disclaimer: This guide is for general education only and is not legal, tax or investment advice. Laws, market data and program terms change, so it may not reflect the latest developments or fit your situation. Treat it as a starting point, not a source of truth, and talk to a qualified lawyer, accountant or financial adviser before you make decisions.