What Is Investment Memorandum?


Author: Roslyn
Published: 30 Nov 2021

Investing in Companies: Private Placement Issues

An investment banker is hired when a company goes through a sale. The first step of the bankers is to understand the company and gather as much information as possible from top management to come up with a profile of the company. A private placement issuance is a way for institutional investors to lend to companies in a similar fashion as banks, with a buy-and-hold approach, and without required trading or public disclosures. Insurance companies refer to investments as purchasing notes, while banks make loans.

A Business Information Memorandum

It is used for raising large amounts of capital, for later stage investment after initial rounds, for the sale of the entire business, and for the capture of the past, current and future performance outlook. An Information Memorandum is only used for a specific event. A copy of Information Memorandum prepared for past events can be useful when there is a need to prepare a summary of the business.

Pitch decks: How to make an investment memo

Many firms in venture capital write their own investment memo when deciding if they should invest in a new company or not. Most founders associate fundraise with pitch decks. Investment memos have been in the space for a while.

Investments memos are a powerful tool that can be used to power a lot of things. They are becoming more important as communication moves to digital. Investment memos are a great way to align your stakeholders.

If you raise capital, you will keep your current and potential investors in the loop with your messaging and the status of your round. Communication with your team over a decision will keep everyone in the loop and on the same page as the project moves forward. It can act as a source of truth to look back on.

A pitch deck is the most important part of a venture capital fundraise. Investment memos have become an important tool for raising money. More founders are using memos and written communication over the traditional pitch deck.

A pitch deck can be taken out of context. If there is a chart on a slide that can be deciphered in many different ways, it can take the control of the story away from you. The investment memo can stand on its own.

PE Investment Memos

Is anyone able to give me an example of a PE investment memo? I would like to see one from a case study when you guys are doing buy side recruiting.

Writing memos for internal business emails

A memo is a short message used for internal communication in a business. Since the introduction of email and other forms of electronic messaging, memos have declined in use, but being able to write clear memos can serve you well in writing internal business emails, as they often serve the same purpose. Memos can be used to communicate with a wide audience, but they can also be used to remind teams or to explain important terms.

A Note on the Use of an Oma and Ci for Capital raising

The 2 terms can be confusing, but generally speaking, an oma is used for raising capital while a cia is used for the sale of a whole company.

An Information Memorandum for an Early-Stage Startup

It is not market practice to create an Information Memorandum for your first investment. Early-stage investors don't want to read a long document. An Information Memorandum usually contains all the information that an early-stage start-up will not have.

Private placement memos and business plans

Private placement memos are sometimes confused with business plans. They have different information for different purposes. A business plan is a document that describes a business and is used for a loan, while a PPM is used for a securities offering.

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