---

name: investment-memo
description: "Synthesize diligence on a startup into a go/no-go investment memo — forces the uncomfortable questions that separate conviction from vibes."

/investment-memo

Most early-stage investment decisions are made on founder energy plus one strong data point — a great growth chart, a name-brand customer, a compelling narrative. The memo gets written after the decision to justify it. This skill reverses that. It forces you to surface the failure case before you've fallen in love with the story, identify what you genuinely don't know, and articulate the specific belief that makes this a yes over the 200 other companies you saw this quarter.

Founder-Market Fit — The Why These People Question

• What in their background gives them specific insight into this problem that a smart generalist wouldn't have?
• Have they lived this pain professionally? Built something adjacent? Do they have relationships that compress a 12-month sales cycle to 3?
• Where is their story weakest? (No domain experience? First-time CEO? No technical co-founder in a deep-tech bet?)
• What do they know that you don't? What did you learn from them in diligence that surprised you?

TAM and Penetration Belief

• What is the actual serviceable market — not the top-down TAM slide, but the number of buyers who have this problem, can pay for a solution, and would consider a new vendor this year?
• What penetration rate do you need in Year 5 to justify this investment? Is that 0.1% of a large market or 30% of a small one?
• What has to be true about the market's evolution for the TAM to expand? (Regulatory change? Workflow shift? New category creation?) Is that already underway?

Moat Assessment

• What would a well-funded competitor with an 18-month head start look like? Could they replicate the core product?
• Is the defensibility from network effects, data accumulation, switching cost, or exclusive relationships — or is it currently just speed?
• What's the first thing that becomes structurally hard to replicate at 100 customers? At 1,000?

Unit Economics Signals

• What does payback period look like today, even if imprecise? Under 18 months is a green signal; over 36 months needs a clear path
• What's the NRR signal — even anecdotally — from early customers? Expansion revenue or pure renewal?
• What's the CAC structure — founder-led sales or repeatable motion? If it's founder-led, when does it transition and what's the plan?

The Failure Case

• What's the most likely reason this company doesn't return capital? Not a generic risk — the specific one for this company.
• Example: "Distribution. They have a great product but zero enterprise distribution, and the two enterprise-experienced advisors are not operationally involved."
• Is this failure case mitigable at this stage of the company? What would need to change?

What You Don't Know

• Name 2-3 things that would change your conviction if you learned them. What diligence would surface them?
• Is there a reference check you haven't made that you should? A customer call? A technical review?
• What's the thing you're most pattern-matching on that may not apply here?

The Decision

• State the investment thesis in two sentences — what must be true about the world for this to be a great investment?
• Is this a yes, no, or "yes if" — and if conditional, what's the specific condition?

Rules

1. The failure case must be written before the thesis — not after
2. "Strong team" is not a thesis — name the specific thing that makes this team right for this market
3. TAM must be bottoms-up, not a slide multiplication — name a real customer segment and a real price point
4. If you don't know something that matters, say so explicitly — a memo that hides uncertainty produces bad decisions
5. The final decision must be stated — "interesting" is not a decision

This memo is a decision document — it produces a defensible yes or a clean no, and a clear articulation of the bet you're making so you can evaluate it 24 months from now.