How to Write a Deal Memo That Gets LPs to Invest (Template + Examples)

I have read countless deal memos and written quite a few myself. Those who fail to secure funding always share the same problems. It's not the problem of having a bad deal, nor a lack of investor interest in the industry in general. It's their failure to do one crucial thing: convince someone who knows nothing about the business and owes nothing to the person presenting the deal to write a check.

I have seen occasions where syndicate heads spend several weeks conducting a thorough investigation and produce an extremely strong memo based on their findings. However, they still do not make it. On other occasions, when the memo is less researched but much more accurate, they manage to get the deal. That's where the problem lies: in the presentation, not in the deal itself.

Allow me to explain that last point in detail. 

First, be clear about what kind of memo you're writing

This misunderstanding definitely needs to be addressed up front. It must be remembered that a deal memo written for an angel syndicate is not the same as one written by an internal venture capital committee. 

Memos written for internal venture capital committees are for people involved in the process, who feel an obligation to assess the opportunity, and who will actually be at the meeting. Deal memos written for an angel syndicate, on the other hand, are meant for people who are none of those things.

They might receive the memo in their email. They might have roughly 60 seconds to decide whether to read further. And they might owe you nothing at all.

The two things every deal memo must do

When stripped down to its essentials, an efficient deal memo achieves two things precisely.

First, it makes the reader understand what the company does. Not in a vague, jargon-heavy way. In a "my friend who knows nothing about this industry could get it in thirty seconds" way.

Second, it must make a compelling case for why this particular business can become a significant success. 

This is it. Everything else (market sizing, team profiles, traction numbers, etc.) is there in aid of achieving those two goals. Failure to do so significantly reduces the impact of the diligence effort. This is where the difficulty lies.

There is no single right answer

If you handed a thousand investors the same due diligence materials and asked them all how to write a deal memo for you, you would get a thousand different memos. Same information, same company, same round. One thousand different products.

It is not a mistake. It is simply the nature of investment analysis. Writing a successful deal memo is an art form that involves many subtleties. Perspective, good judgment, and understanding of what is really important are among the factors involved. As such, some memos communicate the opportunity more effectively than others. 

That needs some consideration before sitting down to type.

The two constraints working against you simultaneously

This is the point at which most budding fund managers start losing track of their priorities. It is essential to highlight this here, since both constraints apply simultaneously and work against each other.

Constraint number one comes from within. If you are the syndicate lead who has been working on this angel syndicate memo for weeks on end, having made all the necessary calls, checked all the decks, and stress-tested the model. Then, by the time you start writing, you find yourself having developed a strong emotional investment in its success. 

In this way, the memo easily converts into the presentation with its annotations. All factors receive an affirmative review; risks are minimized; language takes on an advertising flair. You do not distort the truth; rather, you honestly believe what you write. But you have become a seller, not an informer.

LPs understand this right away. I have seen it happen with many excellent memos. Deals look good, syndicate leads look credible, traction looks credible, but the feedback is invariably the same: "It sounds too much like a sales pitch." And it is quite tough to fix.

Once the trust is gone, the quality of the deal no longer matters.

Constraint number two comes from the outside. What is the place of startup investments in the life of a typical investor? These are not the investments that pay his salary or buy his food, and he knows that up front. And statistically, they are more likely to lose their money than make it. A Kauffman Foundation study found that 52% of angel exits return less than the initial investment. They know that going in." 

When he opens the memo in his inbox, he faces three choices: invest, don't invest, or do nothing. Close the tab, stop reading, and do not respond. The third choice is equally valid and effortless.

That's why the interplay between the two constraints poses such a serious problem for the writer of this memo: you are internally biased toward making the memo long, positive, and detailed, while at the same time you know that the external reality of investors makes this extremely unlikely.

And thus, the more optimistic you are, the faster they'll lose interest. Or, to put it another way, it must be long enough to draw attention, honest enough to maintain trust, and brief enough to be respectful of the reader's time.

You cannot write an encyclopedia

This stems immediately from these considerations.

A person spends many weeks performing proper due diligence. He understands the weight of all this effort. Hence, the memorandum takes the form of an effort to encapsulate it all.

No one ever reads this memorandum.

The length is around three to five pages, which corresponds to roughly ten minutes of reading time, if you’re lucky. This represents the realistic amount of time that can be expected of the limited partner, who owes nothing.

If the memorandum takes longer than that, most people won't even finish it, and some will not even start reading it.

The art of writing a good deal memorandum lies in knowing what to omit.

How to write a deal memo: the template that works 

This is the suggested format for how to write a deal memo. Clear and concise. Ideal for someone reading the report and deciding whether to delve deeper.

Company summary: half a page

In this section, you need to include the firm's name, stage of development, industry, and the required investment. It is important to lay out the essential facts about the company in the report. Context is key to making sense of the information investors see.

What the company does: one paragraph

Introduce the business as if speaking to an intelligent reader unfamiliar with the industry. The reader must be familiar with exactly what the business does, who the target customer is, and why that customer would want to interact with the company.

The thesis: one page

This makes up the essential part of any decent investment memo template. Why is this company interesting to investors now? Why will it be successful, and why is its success important? Give a definite opinion rather than just describing an opportunity.

Traction and proof points: half a page

It is also crucial to include data on revenue, number of users, retention rate, and partner agreements. It is essential to highlight numbers and facts in particular and minimize explanations.

Team: half a page

Do not copy and paste the founder's LinkedIn profile here. Explain why this team is uniquely positioned to succeed. Why do we think they are going to be able to do it?

Risks and mitigations: half a page

It is what separates serious memos from marketing documents. Talk about the actual risks and explain why you think they will not become a problem. Do not ignore this section. It is what backs you up.

The ask: one paragraph

Clearly state how much money you want to raise, at what valuation, and on what terms.

Disclaimer: Every deal and investor audience is different. This framework should be viewed as a starting point rather than a universal template. Depending on the company's stage, sector, and complexity, certain sections may require more or less detail. 

What this looks like in practice

The opening of an angel syndicate deal memo for an early-stage B2B SaaS startup serving compliance teams must be clear and descriptive. Don’t make empty claims regarding the technical prowess of your product; tell us who uses it, how it works, and most importantly, why it makes sense.

Bad opening: "Company X is a cutting-edge, AI-driven compliance automation solution leveraging machine learning to transform how enterprises manage regulatory workflows."

Good opening: "Company X sells software to compliance teams at mid-market financial firms. It replaces a spreadsheet-heavy process that typically takes two analysts a week to complete. With Company X, the same process takes four hours."

The second version tells you exactly what the product does, who it's for, and why it matters in three sentences. That's the register your entire memo should operate in.

How the Syndicate Blueprint at Angel School can help

Almost everything I have written in this piece - the framework, the limitations, and the practice of cutting - is something that only becomes clear through real deals and real feedback. It's useful information to read, but putting it into practice is when it really clicks.

The Syndicate Blueprint course we created at Angel School is geared towards fund managers in the early stages of managing or creating their own angel syndicate. The creation of the deal memo is just one aspect of our course, but this isn't done for academic reasons. It's taught as a judgment process in which one learns to understand a deal, communicate its merits, and build limited-partner trust rather than draining it with one oversold fundraising deal.

If this sounds like what you're after, you should consider it. 

One last thing

Learning how to write a deal memo is ultimately about helping investors make informed decisions. The best angel syndicate deal memo is not the longest or most detailed one; it is the clearest. 

Those investors reading your memo have no obligation to you at all. They do not have any duty to read it, or even to explain to you why they did not read it or why they decided not to move forward. The only thing on which you can rely is your document, which must be thorough, respectful of their time, trustworthy, and truthful.

Be clear. Be honest. Be concise. Develop a reputation so that limited partners wait for your memo because they know they will get the straight story.

It takes time, but the deal memo is where you start.

Jed's Bottom Line

If I had to reduce everything in this article to its simplest form, here's what I'd want you to walk away with.

• A good memo can fulfill just two purposes. First, it helps the reader get a handle on the company. And second, it convinces them that the company has the potential to win. Everything else flows from these two purposes. If the memo fails at accomplishing both, it doesn't matter what else it does.
  
  
• Writing a deal memo is about making judgments. Finding all the information you need to write the memo isn't terribly complicated. It takes some time, but it's not rocket science. It gets complicated when it comes time to decide what to keep in the memo, what to leave out, and how to tell the story without letting your own enthusiasm distort it.
  
  
• Syndicate leads use the deal memo as proof of due diligence. It is not. The limited partners don't care how much effort has gone into due diligence; they want to know if the company deserves their money and attention. Those are two different documents.
  
  
• In most angel syndicates, a memo that can be reviewed in roughly 10 minutes tends to outperform longer documents because it respects investors' limited attention spans.
  
  
• Admit to any risk before someone brings it up in the memo. This does not make you look incompetent; it makes you credible.
  
  
• If the memo reads like a pitch deck, start over. You will know when your investors catch on because then you'll have lost them.
  
  
• The best deal memos are never written in the spirit of trying to close the deal. They're written to educate the reader. Remember that, and it won't be easy.

FAQs

What is a deal memo, and how is it different from a pitch deck? 

The syndicate lead or deal lead typically writes the deal memo to help investors evaluate a specific investment opportunity. Unlike a pitch deck, which the founder builds to sell the vision, an angel syndicate deal memo is an analytical document designed to inform, not to close.

How long should a deal memo be?

The most effective deal memo template runs three to five pages, enough for an investor to read in ten minutes. Any longer and you're writing for yourself, not for them.

What should an investment memo template always include?

Start with at least the following elements: company description, investment rationale, traction, team, risk factors, and funding request or “ask.” Every element must serve one of two purposes: either help the reader to comprehend the business or validate the reason for its potential success.

How to write a deal memo that doesn't sound like a sales pitch?

Discuss the most significant risks openly and explain how the company plans to address them. After an investor senses they are being sold to rather than educated, trust is gone, and nothing can be done to bring it back.

Who typically writes an angel syndicate deal memo?

The syndicate lead writes it, usually after completing due diligence on the deal. Because they have a vested interest in the raise succeeding, keeping the memo honest and balanced is one of the hardest and most important parts of the job.

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