--- title: What Is An Investor Memorandum? description: Learn how to create an effective Investor Memo/Memo to streamline your fundraising process from seed stage onwards. This guide covers key components, tips for success, and essential takeaways to help founders present a compelling case to potential investors. image: https://sfccapital.com/hubfs/AI-Generated%20Media/Images/A%20founder%20shaking%20hands%20with%20an%20investor%2c%20closing%20the%20deal.jpeg --- Disclaimer Please note, company introductions through SFC Capital Ltd ('SFC') are only suitable for ‘High Net Worth Individuals’, or ‘Sophisticated Investors’ as defined by the Financial Services & Markets Act 2000 (FSMA) who are familiar with and willing to accept the high risk associated with private investments. Any investor requesting to contact a company through SFC Capital does so at his/her own risk and is solely responsible for conducting any legal, accounting or due diligence review. There has been no investigation to the accuracy of any information or terms contained herein and we strongly suggest that you seek advice from a person authorised under the FSMA who specialises in advising on investments of this kind prior to commencement of any potential transaction. All content provided by SFC Capital is strictly for informational purpose only and does not constitute business, financial, investment, hedging, trading, legal, regulatory, tax or accounting advice or services. SFC Capital is an appointed representative of SFC Capital Partners Ltd which is authorised and regulated by the Financial Conduct Authority (‘FCA’) in the United Kingdom (FRN 736284). This website is intended for professional investors only; any reproduction of this information, in whole, or part, is prohibited. SFC Capital does not sell or offer to sell any securities and no information provided by SFC Capital is intended to constitute or to be interpreted as any such offer. SFC Capital simply provides an introductory service where potential partners of all sorts can meet. The SFC Angel Fund is managed by SFC Capital Partners Ltd (‘SFCCP’) which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, firm reference number 736284. Information on the Fund is intended for professional investors only; any reproduction of this information, in whole, or part, is prohibited. The content is for information purposes only and should not be used or considered as an offer or solicitation to purchase or sell the securities mentioned herein. The SFC Angel Fund (the ‘SFC Fund’ or the ‘Fund’) is defined as an ‘unregulated collective investment scheme’ (‘UCIS’) and the promotion of a UCIS either within the UK or from the UK is severely restricted by statute. Consequently, this document is only directed at professional clients and eligible counterparties as defined by the FCA and also to persons of a kind to whom the Fund may lawfully be promoted by an authorised person by virtue of Section 238(5) of the Financial Services and Markets Act 2000 and COBS 4.12.4R. Any decision by an investor to buy shares in a fund must be made solely on the basis of the information and terms contained within the Fund’s offering memorandum. Investment in the Fund is made entirely at the investor’s own risk and professional advice should be sought in case of doubt. SFC Capital Partners Ltd (‘SFC’) is authorised and regulated by the Financial Conduct Authority (‘FCA’) in the United Kingdom, firm reference number 736284. This document is intended for professional investors only; any reproduction of this information, in whole, or part, is prohibited. The content is for information purposes only and should not be used or considered as an offer or solicitation to purchase or sell the securities mentioned herein. The SFC Angel Fund (the ‘SFC Fund’ or the ‘Fund’) is defined as an ‘unregulated collective investment scheme’ (‘UCIS’) and the promotion of a UCIS either within the UK or from the UK is severely restricted by statute. Consequently, this document is only directed at professional clients and eligible counterparties as defined by the FCA and also to persons of a kind to whom the Fund may lawfully be promoted by an authorised person by virtue of Section 238(5) of the Financial Services and Markets Act 2000 and COBS 4.12.4R. The SFC Angel Fund is managed by SFC Capital Partners Ltd (‘SFCCP’) which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, firm reference number 736284. Information on the Fund is intended for professional investors only; any reproduction of this information, in whole, or part, is prohibited. The content is for information purposes only and should not be used or considered as an offer or solicitation to purchase or sell the securities mentioned herein. The SFC Angel Fund (the ‘SFC Fund’ or the ‘Fund’) is defined as an ‘unregulated collective investment scheme’ (‘UCIS’) and the promotion of a UCIS either within the UK or from the UK is severely restricted by statute. Consequently, this document is only directed at professional clients and eligible counterparties as defined by the FCA and also to persons of a kind to whom the Fund may lawfully be promoted by an authorised person by virtue of Section 238(5) of the Financial Services and Markets Act 2000 and COBS 4.12.4R. Any decision by an investor to buy shares in a fund must be made solely on the basis of the information and terms contained within the Fund’s offering memorandum. Investment in the Fund is made entirely at the investor’s own risk and professional advice should be sought in case of doubt. The SFC Angel Fund is an SEIS/EIS fund which raises money for early-stage businesses by investing in SEIS and EIS eligible ventures with the aim of returning a profit for investors in the fund. Investment in early-stage companies involves risks such as illiquidity, lack of dividends, loss of investment and dilution. Investment in SEIS/EIS funds should be considered as part of a diversified portfolio. The availability of tax relief depends on individual circumstances and may change in the future. The availability of tax relief depends on the company invested in maintaining its SEIS/EIS qualifying status. There is no assurance that the investment objectives of any investment product will be achieved or that the strategies and methods described herein will be successful. Past performance is not necessarily a guide to future performance and the value of an investment may go down as well as up. Investors may not get back the full amount invested. No warranties or representations of any kind are expressed or implied on this website. I Accept The Terms ## FCA Mandatory Risk Warning & Risk Summary > ## Risk Warning > > **Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment, and you are unlikely to be protected if something goes wrong.** ## Risk Summary **Estimated reading time: 2 min** Due to the potential for losses, the Financial Conduct Authority (“FCA”) considers this investment to be high risk.   What are the key risks? 1\. You could lose all the money you invest. Investments made by the SFC Angel Fund SEIS (the “Fund”) will be in shares in early-stage businesses. Investors in these shares often lose 100% of the money they invested, as many early-stage businesses fail. 2\. You are unlikely to be protected if something goes wrong Protection from the Financial Services Compensation Scheme (FSCS), in relation to claims against failed regulated firms, does not cover poor investment performance. Try the FSCS investment protection checker here: [https://www.fscs.org.uk/check/investment-protection-checker/](https://sfccapital.com/fca-mandatory-risk-warning-and-risk-summary/%20https://www.fscs.org.uk/check/investment-protection-checker/)    Protection from the Financial Ombudsman Service (FOS) does not cover poor investment performance. If you have a complaint against an FCA-regulated firm, FOS may be able to consider it. Learn more about FOS protection here: [https://www.financial-ombudsman.org.uk/consumers](https://www.financial-ombudsman.org.uk/consumers) 3\. You won’t get your money back quickly Even if the businesses the Fund invests your money in are successful, it may take several years to get your money back. The most likely way to get your money back is if the businesses invested in by the Fund are bought by another business or list their shares on an exchange such as the London Stock Exchange. These events are not common. 4\. Don’t put all your eggs in one basket Putting all your money into a single business or type of investment for example, is risky. Spreading your money across different investments makes you less dependent on any one to do well.  A good rule of thumb is not to invest more than 10% of your money in high-risk investments.  [https://www.fca.org.uk/investsmart/5-questions-ask-you-invest](https://www.fca.org.uk/investsmart/5-questions-ask-you-invest) 5\. The value of your investment can be reduced The percentage of each investee company that the Fund owns will decrease if the business issues more shares. This could mean that the value of your investment in each investee company reduces, depending on how much the business grows. Most start-up businesses issue multiple rounds of shares.  These new shares could have additional rights that your shares don’t have, such as the right to receive a fixed dividend, which could further reduce your chances of getting a return on your investment. 6\. S/EIS tax reliefs are not guaranteed Whilst it is the Fund's intention to invest mostly in companies qualifying under SEIS legislation, SFC cannot guarantee that all investments will qualify for S/EIS relief (or IHT relief) or, indeed, if they do initially, that they will continue to do so throughout the life of the investment. The tax advantages of investing through the Fund are therefore not guaranteed.  If you are interested in learning more about how to protect yourself, visit the FCA’s website here: [https://www.fca.org.uk/investsmart](https://www.fca.org.uk/investsmart)  Close Don’t invest unless you’re prepared to lose all the money you invest. This is a high risk investment and you are unlikely to be protected if something goes wrong. Take 2 minutes to learn more. [![SFC Logo + Title x web](https://sfccapital.com/hs-fs/hubfs/SFC%20Logo%20+%20Title%20x%20web.png?width=2000&name=SFC%20Logo%20+%20Title%20x%20web.png)](https://sfccapital.com) - [Startups](https://sfccapital.com/raise) - Investors - [SEIS Fund](https://sfccapital.com/seis-funds) - [EIS Fund](https://sfccapital.com/eis-funds) - [SEIS Explained](https://sfccapital.com/seis-explained) - [EIS Explained](https://sfccapital.com/eis-explained) - [Angel House](https://sfccapital.com/angel-house) - [Advisors](https://sfccapital.com/advisors) - [Portfolio](https://portal.sfccapital.com/portfolio) - [About Us](https://sfccapital.com/about-us) - [Blog](https://sfccapital.com/blog) - [Login](https://portal.sfccapital.com/login) # What Is An Investor Memorandum? [Jason Druker, Chief Commercial Officer](https://sfccapital.com/blog/author/jason-druker) With a background in corporate law and M&A, Jason, joining in 2022, oversees sales strategy, marketing, investor relations, and portfolio management. - 30 Sep 2024 [Startups](https://sfccapital.com/blog/tag/startups) ##### Share on - - - Raising funds for your company can be a daunting, long and hard process, especially from seed stage and beyond. You’ll no doubt already be familiar with the three key documents needed to raise equity funding: your [pitch deck](https://sfccapital.com/blog/pitch-decks-everything-you-need-to-know), financial model and a well-structured virtual data room. Each of these serves a key purpose, but we have found that in the extremely competitive world of early-stage fundraising, where there are many more startups seeking investment than capital available, a founder needs to do everything possible to stand out and make their business and funding round as attractive as possible.  One way to do that is to add a fourth item into the mix, which we could call the Investor Memorandum or ‘Investor Memo’.  The Investor Memo is a narrative document of approximately 5 pages which sets out the key aspects of the investment rationale that an investor might want to include in their own internal investment memo. Essentially, the startup founder does as much as possible of the ‘heavy lifting’ that the investor/fund might otherwise have to do themselves.   In a fundraising environment where every edge, angle and cheat-code can be the difference between an investment and a ‘thanks but no thanks’, the Investor Memo can enable your startup and funding round to jump the queue of others also seeking investment, and therefore increase your chances of securing the funds your business needs.    #### Why You Might Need An Investor Memo An Investor Memo is a concise and objective memorandum that gives the investor all data points for the investor’s decision-making in one document. Essentially, it is an attempt to write the investment committee memo for the potential investor, from their point of view and in their voice. This will save the investor (especially if it is a fund) time and effort, and also elevate their understanding of the business, its potential, and why they should invest. It is **critical** that the Investor Memo is:  - Written from the point of view of the investor, not the founder. This means it should be in the third person, i.e. “The Company is involved in…” and you should not use first person subject pronouns like ‘I’, “We”, and “Our”. - As balanced as possible. Bear in mind that the investor will be hoping to lift and shift or cut and paste from your Investor Memo directly into their own Investment Committee Memo / Approval Paper. So, keep it objective, unbiased and avoid any ‘belief statements’. Ask yourself this question with every sentence you write: “where in data room can I show proof of this statement?”.   #### Key Components ##### 1. Company Overview Describe your company so everyone can get a good understanding in just a few sentences. What space are you operating in? What is your business model? And, of course, what sets you apart from other investment opportunities? This can include early traction, an experienced founding team, valuable intellectual property, and other hard-to-replicate advantages. ##### **2. Vision** Investors don’t back the status quo — they invest in potential. Paint a picture of what your company can become, and clearly lay out your long-term vision and the lucrative opportunities it holds, but remember to stay as balanced as possible. ##### **3. Traction** Lay out all the juicy details like revenue, MRR, ARR, or pipeline. Be transparent and don't hold back your numbers. If you're pre-revenue, own it. But make sure to show how you grow and pick up momentum. And of course, make sure every metric aligns with the financial model in the data room. ##### **4. Customer Acquisition** Show your detailed understanding of the market and customer insights. Include your Ideal Customer Profile (ICP), acquisition channels, channels for growth and retention. ##### **5. Goals** Turn your vision into a tangible checklist. Include short-term and long-terms objectives, key performance indicators (KPIs) and timelines to hit those milestones. **6. Market Analysis**  Outline the key components of the market covering everything from size and growth to the latest trends segments. This should validate the demand for your business and also outline opportunities and threats. And don't forget to back it all up with data and insights from credible sources. ##### **7. Use of Funds** Show how the investment will be allocated to achieve your goals. Provide a detailed budget breakdown including product development, hiring, marketing and other expenses. If this is too much detail for the Investor Memo, provide a summary and hypterlink to the detail in the data room. ##### **8. Team** Especially in the early-stages of a company, it's all about people. Why, of all people, are you the ones who will crack your target market? Showcase your team's roles, and relevant experience. ##### **9. Competitive Landscape** Demonstrate your awareness of the competition and how you are going to differentiate. This can also be a good place to validate your product-market-fit. ##### **10. Risks and Mitigations** This shows how well you are prepared for risks and how well you understand the market. Be honest, usually investors are comfortable with risk and just want to see that you're aware of them and have a plan to mitigate. ##### **11. Capital Structure and Round Dynamics** Give an easy overview of details like the current cap table, details of previous funding rounds, and current conversations with other investors. ##### **12. Exit Scenarios & Defensibility** What are potential exit strategies for companies in your market? Outline different options like acquisition or IPO, a list of potential acquirers, and similar exits in the space.   #### How To Create Your Investor Memo - **Be neutral and evidence-based**: This document is an attempt to look at your business from an Investment Committee’s perspective. The document should be as neutral and verifiable as possible, identifying the objective data points that make your business investable. - **Write from the 3rd person**: To make it as easy for the potential investor as possible, write in the 3rd person so they can simply copy and paste the relevant parts of the Investor Memo into their own actual investment committee paper. - **Use Visuals and Graphics**: Make sure to include relevant visuals and graphics to break up the text but also to add to the credibility. Especially helpful are insights into how the product works and looks like, any important statistics, financial charts, and roadmaps. - **Keep it concise**: Keep the Memo short but informative.   #### Main Takeaways The Investor Memo is a great tool to **enhance your fundraising**. Put yourself in the shoes of the investor, and make the investment case for them. ##### Key Components | 1. Company overview  2\. Vision  3\. Traction  4\. Customer Acquisition 5\. Goals  6\. Market Analysis | 7. Use of funds  8\. Team  9\. Competitive Landscape  10\. Risks and Mitigations  11\. Capital Structure and Round Dynamics  12\. Exit Scenarios & Defensibility | | --- | --- | Make sure to: - Write the document **in 3rd person** and focus on **neutral and verifiable information**. - Use **relevant visuals and graphics** throughout the document. - **Keep it concise**. ## Related Articles 19 Sep 2024 [Startups](https://sfccapital.com/blog/tag/startups) ##### [SEIS Advance Assurance: Everything You Need To Know](https://sfccapital.com/blog/seis-advance-assurance) The Seed Enterprise Investment Scheme (SEIS) is a powerful source of funding that bridges the gap fo... [Read More](https://sfccapital.com/blog/seis-advance-assurance) 27 Nov 2024 [Startups](https://sfccapital.com/blog/tag/startups) ##### [Advanced Subscription Agreements (ASAs)](https://sfccapital.com/blog/advanced-subscription-agreements) What is an Advanced Subscription Agreement? An Advanced Subscription Agreement (ASA) is an agreement... 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This website is intended for  professional investors, high net worth investor or certified sophisticated investors only for the purposes of the FCA's Conduct of Business Sourcebook.; any reproduction of this information, in whole, or part, is prohibited. The content is for information purposes only and should not be used or considered as an offer or solicitation to purchase or sell any securities. Investment in early-stage companies involves risks such as illiquidity, lack of dividends, loss of investment and dilution. Investment in SEIS/EIS eligible companies should be considered as part of a diversified portfolio. The availability of tax relief depends on individual circumstances and may change in the future. The availability of tax relief depends on the company invested in maintaining its SEIS/EIS qualifying status. There is no assurance that the investment objectives of any investment opportunity will be achieved or that the strategies and methods described herein will be successful. The investment products cited herein may place capital at risk and therefore investors may not get back the full amount invested. Past performance is not necessarily a guide to future performance and the value of an investment may go down as well as up. Investors may not get back the full amount invested. Companies’ pitches for investment are not offers to the public and investments can only be made by members of SFC Capital. SFC Capital takes no responsibility for this information or for any recommendations or opinions made by the companies. Neither SFC Capital nor any of its employees provide any financial or tax advice in relation to the investments and investors are recommended to seek independent financial and tax advice before committing. This website is not directed at or intended for publication or distribution to any person (natural or legal) in any jurisdiction where doing so would result in contravention of any applicable laws or regulations. No warranties or representations of any kind are expressed or implied herein. 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