casemark/drafting-investment-committee-memos

Drafting Investment Committee Memos

When To Use

• Preparing a formal IC memo to present a new deal for partner vote
• Documenting the investment thesis for a seed, Series A, or later-stage opportunity
• Creating a standardized write-up for deal pipeline review or weekly IC meetings
• Recording the rationale behind a pass decision for institutional memory

Inputs To Gather

• Company materials: Pitch deck, data room access, financial model or projections, cap table
• Deal terms: Proposed round size, valuation (pre/post), instrument type (SAFE, priced equity, convertible note), pro rata rights, board seat, and any side letter terms
• Market data: TAM/SAM/SOM estimates with sourcing, comparable company benchmarks, relevant industry reports
• Team information: Founder bios, LinkedIn profiles, prior exits or notable experience, key hires and org gaps
• Competitive landscape: Direct and adjacent competitors, differentiation claims, switching costs
• Diligence findings: Customer references, technical diligence notes, legal/IP review status, any red flags surfaced
• Fund context: Current fund deployment pace, portfolio overlap or conflict check, reserve strategy implications

Workflow

1. Confirm memo scope and format

   • Determine whether this is a full IC memo (for vote), a preliminary screening memo, or a deal update on an existing portfolio company
   • Confirm the fund's standard IC memo template or section expectations

2. Draft the deal overview

   • One-paragraph company description: what they do, for whom, and why now
   • Round terms summary table: round size, valuation, lead investor, proposed allocation, instrument type, key terms
   • Indicate the fund's proposed check size and resulting ownership percentage

3. Articulate the investment thesis

   • State 3-5 core thesis points, each as a clear assertion (e.g., "Founder-market fit is exceptionally strong because...")
   • Support each point with specific evidence from diligence, not generic claims
   • Distinguish between validated signals and assumptions that require monitoring post-investment

4. Assess the market opportunity

   • Present TAM/SAM/SOM with methodology and sources — flag any top-down-only estimates with [VERIFY]
   • Identify key market tailwinds and timing catalysts
   • Note regulatory or macro risks that could compress or expand the opportunity [VERIFY: jurisdiction-specific regulatory landscape]

5. Evaluate the team

   • Founder background and relevant domain expertise
   • Key hires in place vs. critical gaps to fill in next 12-18 months
   • Assess founder coachability and reference check themes

6. Map the competitive landscape

   • Position the company against 3-6 direct competitors on key dimensions (pricing, product maturity, distribution, funding)
   • Identify the company's durable competitive advantage or moat thesis
   • Flag any well-funded incumbents or adjacent threats

7. Model return scenarios

   • Build base, upside, and downside cases with explicit assumptions for each
   • Show entry ownership, expected dilution through exit, and implied MOIC/IRR for each scenario
   • State assumed exit multiples and comparable exit transactions — mark forward-looking estimates with [VERIFY]

8. Identify key risks and mitigants

   • List the top 3-5 risks in order of severity (e.g., concentration risk, regulatory, technical, go-to-market)
   • For each risk, state a specific mitigant or monitoring trigger
   • Flag any deal-breaker risks that require resolution before closing

9. State the recommendation

   • Clear invest/pass/conditional-invest recommendation
   • If conditional, specify exact conditions (e.g., "invest contingent on completing technical diligence by [date]")
   • Proposed next steps and timeline to close

Output

The IC memo should follow this structure:

• Header: Company name, round, date, deal lead, memo author
• Executive Summary: 3-5 sentence overview covering what, why, and at what terms
• Deal Terms Table: Round size, valuation, instrument, allocation, ownership, key provisions
• Investment Thesis: Numbered thesis points with supporting evidence
• Market Analysis: TAM/SAM/SOM, dynamics, timing
• Team Assessment: Founders, key hires, gaps, references
• Competitive Landscape: Positioning matrix or comparison table
• Financial Projections & Return Analysis: Revenue trajectory, burn, scenario table with MOIC/IRR
• Key Risks & Mitigants: Risk table with severity and mitigant columns
• Recommendation & Next Steps: Decision and action items

Format financial figures consistently (e.g., "$2.5M ARR" not "2.5 million in annual recurring revenue"). Use tables for terms and comparisons. Keep the full memo to 4-8 pages equivalent.

Quality Checks

• [ ] Every thesis point is backed by a specific data point or diligence finding, not a generic assertion
• [ ] Valuation analysis references comparable rounds or public comps with named sources
• [ ] Return scenarios use internally consistent assumptions (growth rate, dilution, exit multiple align)
• [ ] All forward-looking projections and unverified market sizing are marked with [VERIFY]
• [ ] Cap table math is correct: check size, price per share, ownership percentage, and dilution all reconcile
• [ ] Conflicts check completed: no portfolio company overlap or LP conflict noted (or flagged if present)
• [ ] Risks section includes at least one non-obvious risk beyond standard market/execution risk
• [ ] Memo tone is analytically balanced — presents the bear case as rigorously as the bull case
• [ ] Fund-specific formatting and section requirements are followed