Thesis · evidence · conditions
An investment memorandum:
a document for a decision
A good memorandum does not sell a project at any price. It concisely and verifiably shows the investment thesis, feasibility, financial scenarios, key uncertainties and the conditions under which a decision remains justified.
Anton Konnov · 21 August 2026 · 10 min read
Purpose
Start with the question, not the pitch
The document must name the subject of the decision: the investment amount, the form of involvement, the stage, the horizon, the required return or the strategic effect. The reader needs to understand what is being asked to approve now and which reviews are still incomplete.
A memorandum brings together the findings of commercial, financial, operational, legal and other specialist reviews, but does not replace the underlying models and expert opinions.
Six steps
How to prepare an investment memorandum
Frame the decision and thesis
Record the project objective, the proposed transaction, the amount and use of funds, the horizon, success criteria and the no-deal alternative. Lead with a short executive summary rather than forcing the reader to reconstruct it from appendices.
Test the market and demand
Show the target customer, the problem, the addressable segment, competitors, sales channels and actual demand confirmation. Separate external data, internal observations and the team's assumptions.
Describe the delivery model
Link product, price, volume, variable and fixed costs, capacity, team, partners, licences and stages. Separately flag critical dependencies and resources that are not yet secured.
Assemble financial scenarios
Show linked forecasts, cash flow, funding needs, working capital and value-switching thresholds for key drivers. Alongside the base case, a downside case and sensitivity to material assumptions are required.
Disclose risks and conditions
For each material risk, specify the cause, potential effect, owner and mitigation. Uncertainty can be translated into financing tranches, preconditions, limits, reserves and control points.
Provide a recommendation and monitoring plan
State: approve, reject, rework or move to the next stage. List the decision conditions, responsible parties, timelines, monitoring metrics and grounds for review.
Structure
What should be visible without the appendices
The proposal
What is being approved, for what amount, in what form and at what stage.
The evidence
Demand, unit economics, team capability and resource availability.
Uncertainty
Key assumptions, scenarios, sensitivity and material risks.
Conditions
Tranches, protective mechanisms, control points and grounds for pause.
Quality
Every number must have an origin
The source, date and owner of every material assumption.
The link between the memorandum text and the version of the financial model.
A separation between fact, external assessment and forecast.
Consistency across volumes, timelines, resources and cash flow.
A list of open questions and the impact of each on the decision.
Common errors
What weakens the decision
An optimist-only case, a top-down market without an achievable segment, returns without a liquidity need and a risk register without any deal adjustment are all dangerous. A voluminous document cannot compensate for unverified links.
It is useful to separate the project's investment attractiveness from the quality of the specific transaction: a good asset may be offered on unfavourable terms, while a risky project may become acceptable after tranching and constraints.
AI in memorandum preparation
Linking findings to evidence and quickly checking consistency
An AI agent can collect facts from a data room, financial model and expert opinions, flag version discrepancies and prepare a draft document structure with source references. This reduces manual search, but does not replace fact-checking, deal assessment or an investment committee decision.
Source materials
Methodological reference points
HM Treasury Green Book 2026: options, costs, benefits, risks and monitoring ↗
World Bank: economic analysis of investment operations from a stakeholder perspective ↗
Aswath Damodaran, "Investment Valuation": linking cash flows, risk and value ↗
This material is educational and does not constitute an investment recommendation. A specific decision requires financial, legal, tax and sector-specific review.
First step
Frame the decision and the open questions
We will link the investment thesis, the model, the risks and the conditions into one verifiable document.