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JWBT534-Memotemp JWBT534-Ramsinghani June 30, 2011 1:56 Printer: Yet to Come

Investment Memo Template

typical investment memorandum is used to memorialize the investment

A rationale. The data points are gathered from various sources (business
plan, market studies, due diligence calls). Such a memo is typically about
five to seven pages in length and covers key data points as follows.

I. Overview
 Brief business overview

 Stage and status of the company

 Investment amount sought

 Syndicate partners, if any

II. Investment Rationale

 Market need/pain points

 Competitive forces and their inability to address key opportunity areas

 How the proposed opportunity addresses the market pain
 Market segments and growth areas

 A strong management team with venture experience

 Financial: capital needs to reach break-even; future rounds anticipated

III. Investment Terms

 Amount of investment
 Pre-money valuation
 Preferences

 Liquidation
 Anti-dilution
 Right of first refusal

IV. Board and Governance

 Size of board

 Participation on committee: audit committee, compensation

committee
V. Investment Risks
 Technology—proof of concept
 Market adoption
 Scale-up

 Management

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JWBT534-Memotemp JWBT534-Ramsinghani June 30, 2011 1:56 Printer: Yet to Come

2 INVESTMENT MEMO TEMPLATE

Financing/future capital needs

Competition/regulatory
VI. Exit Analysis
 Rationale and universe of acquirers

 Comparable analysis: public markets and private companies

 Projected IRR calculations