Sample Investment Memo Template

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An investment note is a document prepared by VC funds that outlines the analysis and recommendation for potential investments. This note serves as a basis for decision-making by the investment team and other stakeholders within the VC firm. Also known as an Investment Memo, it is crucial for aspiring VC job seekers to learn the right skillset of writing highly relevant investment notes.

Here are the key components typically included in an investment note:

  1. Executive Summary: A brief overview of the investment opportunity, summarizing key points such as the company’s name, industry, market opportunity, and the analyst’s recommendation.
  2. Investment Thesis: A detailed explanation of why the investment is attractive, including the market opportunity, competitive landscape, and the unique value proposition of the company.
  3. Market Analysis: An assessment of the market size, growth potential, trends, and dynamics relevant to the company’s industry. This section helps justify the investment opportunity and provides context for evaluating the company’s potential.
  4. Company Overview: A description of the company’s business model, products or services, target customers, and competitive positioning. This section provides insights into the company’s operations and how it creates value in the market.
  5. Financial Analysis: An analysis of the company’s financial performance, including historical and projected revenue, expenses, profitability, and key financial metrics such as gross margin and burn rate. This analysis helps assess the company’s financial health and growth trajectory.
  6. Operational Analysis: An evaluation of the company’s operational capabilities, including management team, technology, intellectual property, sales and marketing strategies, and any operational risks or challenges.
  7. Investment Risks: Identification and assessment of potential risks and challenges associated with the investment, such as market risks, competitive threats, regulatory hurdles, and execution risks. This section helps the investment team understand the potential downsides of the investment.
  8. Valuation: A valuation of the company based on various methods such as comparable company analysis, discounted cash flow analysis, or venture capital method. This section provides insights into the company’s potential valuation and helps determine the appropriate investment amount and terms.
  9. Investment Recommendation: A conclusion and recommendation from the analyst on whether to proceed with the investment, including the recommended investment amount, valuation, and any specific terms or conditions.

Overall, an investment note serves as a comprehensive analysis and recommendation document that guides the investment decision-making process within a VC fund. It provides a structured framework for evaluating investment opportunities and helps ensure alignment among the investment team and other stakeholders.

Investment Proposal


Stage 1 Recommendation Note:

Please find the first cut recommendation note ([Decline/Approval]) for XYZ

Deal: Raising $2M at a pre-money valuation of ____________

What does the company do?
  • XYZ is a product-driven, managed marketplace. They connect businesses and executives with vetted remote talent/virtual assistants to delegate mundane everyday tasks.
  • The virtual assistants can work on tasks such as expense management, web research, data entry, shift scheduling, client communication etc.
  • The platform also comes with a software suite that helps with better co-ordination with the VAs and enables VAs to perform task more efficiently.
Revenue Model:
  • Flat Subscription based model for the Virtual Assistant + Software
  • The platform operates as a subscription service for its assistant services, charging businesses a monthly fee which covers the cost of the employee and includes the software suite.
  • The Basic subscription costs $699/month, access to the VA is limited for 8 hours a day
  • The Pro subscriptions costs $1249/month, provides access to VA for 16 hours in a day along with calling features and automated workflows
  • The company has more revenue channels in the pipeline with upsells for sales and outbound calling VAs, call and SMS receptionists, digital marketing, SEO and social media personnel.
Key Reasons: [Proceed or Decline]
  • The company has correctly identified a major pain point of a lot of businesses and has shown great application and determination to showcase the market need for the same.
  • However, despite their growth within a short space of time, there is a lack of clear and defined USP that can set it truly apart from the competition.
  • Wings as a platform merely acts as a conduit to hire VAs from international markets, the same can be achieved via a host of other platforms and services i.e. Fiverr, Freelancer, PPH, Upwork etc.
  • A lot of such tasks can also be automated via chatbots/voice bots viz a viz Siri, Google assistant etc.
  • There is also a lack of clarify on the vertical the company want to target: is it a business process outsourcing or a workflow automation SaaS? Lack of focus on the target market is a red flag for us.
  • In terms of technology, there does not seem to be sufficient advancement which can act as a MOAT against competition.
  • Workflow automation tools using NLP are promising but needs more validation.
Key risks:
  • Disintermediation: VAs and businesses might take their collaboration off the platform; the company’s stage is too early to track retention metrics.
  • Technology risks: Technology and automation are not the main levers for the business operations, there will be signification operational challenges at scale.
  • Exit risks: With the current business model in place, the company might have issues raising growth capital at later stages and therefore would hamper the exit strategy of the fund.
  • In the first four months of operation, the company has managed to:
    • Scale the MRR to $32k,
    • The solution has signed up more than 1,000 customers and handled more than 255,000 tasks since 2020.
    • They have succeeded in placing the Business Assistant into resources and benefits packages of 500 startups, UC Berkeley Skydeck, Long Beach accelerator with Techstars and Y-Combinator in the pipeline
    • They mobile app is also deployed and available on Android and iOS
Customer Acquisition Strategy:
  • The company has partnered with renowned startup accelerators, incubators and enablers such as YC, Techstars, 500 Startups, UC Berkeley SkyDeck etc. to offer Wing Assistant in the resources and benefits package. This helps them create brand value and onboard marquee startups as their clients
  • The company runs a sentiment analysis to gauge conversations between VAs and customers, to help them improve quality of their services
  • The rest of the customer acquisition strategy is a blend of social media marketing, outbound sales teams, inbound lead generation to create a pipeline of prospective customers.
Market size (large):

Top Down/Bottom Up Approach – Calculate on the basis of factual data in terms of the number of companies in the ICP.

  • S.No. Company Description Funds raised
  • 1 XYZ1 App integration and workflow automation platform $3.21 Mn in seed
  • 2 XYZ2 Provider of AI-based virtual assistant for contact center automation. Its suite of speech and language solutions enables enterprises to automate their contact center operations. $31.1Mn in Series B
  • 3 XYZ3 Online hiring platform for virtual assistants $1.43Mn in Series A
  • 4 XYZ4 AI based virtual assistants for customer service automation $1.68Mn in Series A
  • 5 XYZ5 Provider of an AI-based automated order-taking app for concierge services $11Mn in Series A

A lot of companies are either focused on task automation using AI to reduce dependencies on staff for recurring tasks or enabling businesses to hire VAs more efficiently, XYZ acts as a full stack platform and offers both the services

We also have competition from traditional freelancing platforms like Freelancer, Workafy, PPH, Upwork, Fiverr etc. These platforms also act as relevant conduits to onboard VAs

Globally there have been a few companies that have succeeded in the domain:

  1. Double: SaaS based task automation solutions provider. They have raised $15mn in their Series A
  2. Magic: Provider of on demand virtual assistants. Raised $12.1Mn in their Series A

Double is led by an experienced team who have past experiences Outlook, Sunrise Calendar, Microsoft etc.

While Magic also has a well-rounded team, they do not have a distinguished past experience before starting the firm.

Wishup has captured about 33% of the market-share while Magic and Double have 24% each as of May

Founders: (Single founder)
  • CEO: A technologist with 11 years of exp. in the software industry. Worked with Barns & Nobel, Goldman Sachs, Morgan Stanley. Prior experience of venture building
Company Projections:
  • Add Financial Projections of the company if needed/data available

Based on the current ARR of $384k and taking into account the exponential growth rate of the company as well as the relative multiples approach, the valuation range I would prefer for the company would be capped at $8Mn

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