Who Uses a Startup Investment Memorandum?
Investment memorandums for startups and growth-stage businesses are typically prepared in these situations:
- Seed and early-stage capital raises — when seeking angel investors, family offices, or small VC funds who expect a detailed written overview before committing time to a meeting
- Series A and growth rounds — when institutional investors request a detailed written document alongside the pitch deck
- Strategic partnerships — when presenting a business to a potential partner, distributor, or white-label customer who needs detailed information before committing
- Early acquisition processes — when a startup founder receives acquisition interest and needs to present the business formally to a corporate buyer or PE firm
- Accelerator or grant applications — some programs require a written investment memorandum as part of the application
- Employee share schemes — in some jurisdictions, a formal investment memorandum or information memorandum is required when offering shares to employees
What a Startup Investment Memorandum Should Include
A startup investment memorandum is more forward-looking than a business sale IM (which focuses primarily on historical performance). However, the core sections are similar:
- Executive Summary — the investment thesis in 200–300 words: what the business does, the market problem it solves, the traction achieved, and the ask
- Business Overview — company history, legal structure, founders, ownership, and what stage the business is at
- Problem & Solution — the market problem being solved and how the product or service addresses it better than existing alternatives
- Market Opportunity — total addressable market (TAM), serviceable addressable market (SAM), target segment, and growth trajectory
- Product / Service — detailed description of the offering, technology stack (where relevant), IP, and competitive differentiation
- Traction & KPIs — revenue (if any), ARR/MRR, customer count, retention rates, NPS, and other relevant growth metrics
- Business Model — how the business generates revenue, pricing model, unit economics (CAC, LTV, payback period)
- Go-to-Market Strategy — how the business acquires customers and plans to scale
- Team — founder backgrounds, relevant experience, key hires, and advisory board
- Financial Overview — historical financials (if available), 3-year financial projections with assumptions clearly stated
- The Ask — how much is being raised, at what valuation, and how the funds will be deployed
- Use of Funds — specific allocation of the capital being raised
Investment Memorandum vs Pitch Deck for Startups
Many founders ask whether they need an investment memorandum or a pitch deck — and the answer is usually: both, for different purposes.
A pitch deck is a visual, presentation-format document (typically 15–20 slides) used in investor meetings. It is designed to be presented verbally, with slides providing visual support for the spoken narrative. It is engaging and succinct, but deliberately incomplete — it is designed to generate a follow-up, not to answer every question.
An investment memorandum is a standalone written document that can be read independently, without the founder presenting. It is comprehensive — it answers the questions that follow a pitch deck. Sophisticated investors who are seriously interested in a deal will request an IM (or equivalent) after the initial pitch, to conduct preliminary due diligence before committing to a deeper look.
The sequencing is typically: Business Summary → Pitch Deck → Investment Memorandum → Due Diligence → Term Sheet.
Financial Projections in a Startup IM
Financial projections are a critical and often contentious part of a startup investment memorandum. Early-stage businesses without significant revenue history must rely on projections — but overly optimistic projections without credible assumptions damage credibility more than they help.
Best practice for startup IM financial projections: present 3-year revenue and EBITDA projections, broken down by revenue stream. Include all key assumptions explicitly — average revenue per customer, expected conversion rates, marketing spend and expected CAC, headcount growth, and gross margin assumptions. Show a "base case" and a conservative case. If the business has historical revenue, anchor the projections to actual growth rates with a clear explanation of why growth will accelerate.
Investors who fund startups are experienced at evaluating projections. The goal is not to impress with a big top-line number — it is to demonstrate that the founders understand their unit economics and can build a credible financial model.
Using MemorandumMaker for Startup & Growth-Stage Business Sales
MemorandumMaker is primarily designed for established operating businesses being sold through an Australian business broker. However, growth-stage businesses — particularly those that have achieved meaningful revenue and are attracting acquisition interest — can also benefit from MemorandumMaker's capabilities.
For a startup or growth-stage business pursuing a trade sale or strategic acquisition, MemorandumMaker produces a comprehensive, professionally written document that presents the business to corporate buyers, private equity, or strategic acquirers. The Financial Overview section handles both historical performance and projections. The Growth Opportunities section is particularly well-suited to presenting the upside available to a buyer with greater resources.
For pre-revenue or very early-stage startups seeking investment (rather than acquisition), a pitch deck and an investor memo may be more appropriate than a full IM. MemorandumMaker is most effective for businesses with at least 12 months of trading history and $500K+ in annual revenue.