An investment memorandum is a detailed document in which a company presents itself to an investor: business, market, financials, how much it is raising, for what and on what terms.
Investors read it after the pitch deck to check the numbers. It is not a securities prospectus or an offer, but false statements in it carry liability.
Below: how a memorandum differs from a pitch deck, a business plan, a teaser and a CIM, when you need one, the 12 sections it consists of and what investors check in each.
Then a hypothetical memorandum of a Spanish SaaS company with numbers that tie together, and the legal side in Spain and the EU: when you need a prospectus instead, why you need a disclaimer and an NDA, and what false statements can cost you.
What an investment memorandum is
An investment memorandum (also called an information memorandum) is a written description of the company and the deal for an investor.
A pitch deck answers “is this worth an hour of my time”; a memorandum answers “can I trust these numbers and on what terms do I invest”.
Investors read it without the founder in the room, so every statement has to rest on data: accounts, bank statements, contracts, the financial model.
The memorandum is prepared by the side raising the money: a startup founder, the owner of an established business selling a stake, or an adviser acting for them.
Inside a fund there is also an “investment memo” — a note for the investment committee.
That is a different document, written by the fund’s analyst about your company, and this article is not about it.
Memorandum, pitch deck, business plan, teaser and CIM: the differences
| Document | Length | When it is sent | Purpose |
|---|---|---|---|
| Teaser | 1–2 pages, often without the company name | First, before an NDA | Spark interest and get a signed NDA |
| Pitch deck | 10–20 slides | At the first meeting or by email | Get a second meeting |
| Investment memorandum | A document with appendices; length depends on the stage | Once the investor is interested, often after an NDA | Let the investor check the business, the numbers and the deal terms |
| CIM (confidential information memorandum) | Usually 30–80 pages or more | When selling a business or a stake, after an NDA | Give the buyer everything needed to make a price offer |
| Business plan | As long as the decision requires | To a bank, a public programme, internal use | Describe how the business will run; no deal terms |
When a business is sold, the teaser is typically one to two pages, sent anonymously and without an NDA, while the CIM of 30–80 pages or more goes only to buyers who have signed an NDA.
A memorandum for a funding round belongs to the same genre as a CIM but is shorter: a startup has less history, and the investor cares more about the team and growth than about five years of accounts. For how a deck is built, see Pitch deck for investors.
When you need a memorandum
- A startup round. Venture capital funds often make do with a deck, a financial model and a data room. A memorandum is most useful where the investor is not a professional: private investors, family offices, business angels investing in startups for the first time.
- A private investor in an established business. Someone putting money into a café chain or a manufacturer wants to see the revenue history, the contracts and how they get their money back. A deck is too short for that.
- Selling a stake or the whole business. Here the document is called a CIM. It rests on a valuation: see How to value a business for sale.
- A bank. A bank usually asks for accounts, tax returns and a business plan, and writes its own credit memo. You can attach the memorandum, but the deal terms and exit section are irrelevant to a loan.
Investment memorandum structure: 12 sections
The order follows the investor’s questions: what the business is, why it will grow, what it is worth and how the money comes back.
You can rename sections, but do not drop them: investors fill any gap with the worst assumption.
| Section | What the investor checks | Common mistake |
|---|---|---|
| 1. Executive summary | Whether one or two pages explain the business, how much money is needed and on what terms | Written first and never updated; its numbers contradict the rest |
| 2. Problem and product | Whether the customer pain is real and the product solves it better than alternatives | A feature list instead of the result for the customer |
| 3. Market | The size of the market the company can realistically win, and where the figures come from | Only a “trillion-euro” global market with no bottom-up estimate |
| 4. Business model and unit economics | What a customer brings in, what it costs to acquire, when that pays back | CAC without sales salaries; margin without service costs |
| 5. Traction | Revenue, customers, growth, retention — with dates and sources | Cumulative charts instead of monthly ones; “pilots” without contracts |
| 6. Team | Who the key people are, their stakes and experience, who is missing | A list of credentials unrelated to the company’s tasks |
| 7. Financial forecast and assumptions | Which assumptions drive the forecast and what happens if they fail | A forecast with no assumptions and no downside case |
| 8. How much money and for what | The round size, how many months it lasts and which milestone it reaches | An amount not linked to the model; no reserve |
| 9. Deal terms and valuation | Pre-money valuation, investor stake, instrument, rights | A valuation with no rationale, or not stating whether it is pre- or post-money |
| 10. Risks | What can go wrong and what the company does about it | Section missing, or only generic “market and competition” risks |
| 11. Investor exit | How and when the investor can sell and what they might get | Promised returns instead of scenarios |
| 12. Appendices | Accounts, model, contracts, articles, cap table | Appendices “available on request” that then take weeks to assemble |
More on the sections investors scrutinise most: Startup unit economics, Startup traction, Basics of a financial model and How to value a startup.
How to prepare a memorandum: six steps
The memorandum is written last, not first: model and numbers come before text. Otherwise the text promises what the model cannot support.
- Financial model and assumptions. Every number in the memorandum comes from one model: customers, price, churn, costs, hiring.
- Reconciliation with actuals. Revenue and customer numbers are checked against the books and bank statements. A discrepancy found by the investor costs more than any impressive figure gains.
- Section texts. Sections 2–11 first, the executive summary last, from the finished text.
- Deal terms. Amount, valuation, stake, instrument and investor rights are agreed among the founders before anything is sent.
- Legal review. Disclaimer, NDA, and a check that the mailing does not turn into a public offer. More on this below.
- Data room. Appendices sit in one folder with access controls, so the investor gets them the day they ask.
What else to do before the first investor conversation: Startup investment readiness.
Investment memorandum example
Below are excerpts from the memorandum of a hypothetical company: a Spanish SaaS for booking appointments at beauty salons.
The company and figures are invented; any resemblance is coincidental. All numbers come from one model and tie together.
Executive summary
Online booking and reminder service for beauty salons in Spain. 420 salons pay on average €89 a month excluding VAT: revenue of €37,380 a month, or €448,560 a year (ARR).
Operating result is around zero. The company is raising €1,200,000 at a €3,600,000 pre-money valuation; the investor receives 25%.
The money goes to sales and product; the 24-month target is about 1,730 salons, ARR of about €1.85 million and break-even.
Unit economics
| Metric | Value | How it is calculated |
|---|---|---|
| Average revenue per account (ARPA) | €89 a month | Monthly revenue / paying salons |
| Gross margin | 78% | After hosting, SMS, payment fees and support |
| Churn | 2% a month | Average customer lifetime of 50 months |
| LTV | €3,471 | €89 × 78% / 2% |
| CAC (paid channels) | €600 | Marketing and sales salaries / new customers from paid channels |
| LTV / CAC | 5.8 | 3,471 / 600 |
| CAC payback | 8.6 months | 600 / (€89 × 78%) |
Financial forecast and assumptions
Assumptions: €40,000 a month of marketing brings about 67 salons a month at a €600 CAC, and another 10 come through referrals; churn is 2% a month; prices stay flat.
Current costs are €29,000 a month; after the round, marketing of €40,000, hiring in product and sales of €40,000 and other costs of €10,000 a month are added.
| Now | In 12 months | In 24 months | |
|---|---|---|---|
| Paying salons | 420 | 1,155 | 1,731 |
| ARR | €448,560 | €1,233,362 | €1,849,210 |
| Monthly operating result | +€156 | −€38,831 | +€1,199 |
| Round money spent, cumulative | — | €734,275 | €930,429 |
The largest cash gap, €931,628, falls in month 23; in month 24 the company turns positive. If churn or CAC come in worse than planned, the gap grows — see the risks section.
How much money and for what
| Item | Amount | Share |
|---|---|---|
| Marketing and sales | €415,000 | 35% |
| Hiring in product and sales | €415,000 | 35% |
| Other costs | €100,000 | 8% |
| Reserve | €270,000 | 22% |
| Total round | €1,200,000 | 100% |
The first three lines cover the cash gap until break-even: new spending over 24 months is €2,160,000, and the rest is covered by gross profit from new customers.
The reserve equals about seven months of average burn, in case growth is slower.
Deal terms
Pre-money valuation €3,600,000, post-money €4,800,000, investor stake 25%. The valuation is about 8 times annual revenue (3,600,000 / 448,560).
That is high for a round at this stage and the investor will negotiate: the memorandum should show what the valuation rests on, not just the result.
Risks
The model is sensitive to churn and acquisition cost.
If churn rises to 3% a month, the company needs €1,084,028 and does not turn positive within 24 months; if CAC rises to €800, the gap reaches €1,229,701 — more than the round.
A strong memorandum names such scenarios itself and says which levers the company has: slow hiring, raise prices, change channels.
Investor exit
A scenario, not a promise: if the company is acquired in six years for €25 million (5 times ARR of €5 million) and the investor’s stake is diluted from 25% to 18% by later rounds, they receive €4.5 million — 3.75 times the investment.
The legal side in Spain and the EU
This section is an overview, not legal advice. Have a lawyer check the structure of your specific deal.
A memorandum is not a prospectus. Securities may be offered to the public or admitted to trading on a regulated market only after a prospectus is published under EU Regulation 2017/1129 (Article 35.1 of Spain’s securities markets law, Ley 6/2023).
A prospectus is approved by the regulator (in Spain, the CNMV) and follows a mandatory format.
A memorandum is a private document: nobody approves it, but it gives no right to address the public either.
When no prospectus is needed. The Regulation exempts offers addressed solely to qualified investors, offers to fewer than 150 natural or legal persons per EU country (other than qualified investors), securities with a denomination of at least €100,000, and offers where each investor puts in at least €100,000 (Article 1(4)(a)–(d)).
There is also a size threshold.
Spanish law (Article 35.2.b of Ley 6/2023, as consolidated on 7 October 2026) says no prospectus is needed for offers in the EU below €8 million over 12 months.
EU amendments (Regulation 2024/2809, the Listing Act) raised the general threshold to €12 million from 5 June 2026 and let member states lower it to €5 million — ask a lawyer which threshold applies to your deal.
Advertising without a prospectus. If an offer is exempt from a prospectus but aimed at the general public through advertising, in Spain an entity authorised to provide investment services must be involved and validate the information for investors (Article 36.1 of Ley 6/2023); this does not apply to crowdfunding platforms (Article 36.2).
Shares in an SL are not securities. Shares in a Spanish SL (participaciones sociales) “in no case” qualify as securities (Article 92.2 of the Capital Companies Act), so prospectus rules are generally understood not to apply to them.
But transfers of SL shares are restricted by the articles and the law, and offering them to the general public is still unwise.
If you raise through a licensed crowdfunding platform, investors receive a key investment information sheet (KIIS) under EU Regulation 2020/1503 instead of a prospectus, with a limit of €5 million over 12 months.
Disclaimer. The memorandum opens by stating that it is not an offer of securities or a prospectus, that forecasts are estimates rather than guarantees, and that the document is confidential.
A disclaimer does not shield you from liability for knowingly false facts, but it separates a forecast from a promise.
NDA. Spain’s trade secrets law (Ley 1/2019) protects information only if its holder has taken “reasonable measures” to keep it secret (Article 1.1.c).
An NDA before sending the memorandum is one such measure. Funds often refuse to sign NDAs; in that case, leave out anything you could not show a competitor.
Liability for false statements. If an investor invested because of serious deceit (dolo), the contract can be annulled, and lesser deceit gives a right to damages (Articles 1269–1270 of the Spanish Civil Code); the annulment action expires four years after the contract is performed (Article 1301).
Deliberate deception for gain can amount to fraud (estafa, Article 248 of the Criminal Code: six months to three years in prison).
For a prospectus, liability is set out in the law: the issuer and its directors are liable, and claims can be brought within three years (Article 38 of Ley 6/2023).
The takeaway is simple: only numbers backed by documents go into the memorandum, and forecasts are labelled as forecasts.
If you need a memorandum for a specific round or stake sale, we can prepare the model, the numbers and the document with you — see Investment readiness.
Frequently asked questions
What does investment memorandum mean?
It is a detailed written description of the company and the deal for an investor: what the business is, its numbers, how much money it needs, for what and on what terms. The investor uses it to check what they saw in the pitch deck and decide whether to invest.
How is a memorandum different from a pitch deck?
A pitch deck is 10–20 slides meant to win a second meeting. A memorandum is text with tables and appendices that the investor reads without you, to check the numbers and terms. The deck creates interest; the memorandum answers the questions that interest raises.
How many pages should an investment memorandum be?
For a startup round, 15–30 pages plus appendices is usually enough: the financial model, accounts, the cap table. A CIM for a business sale is longer — 30–80 pages or more. Length matters less than an executive summary of one or two pages that reads on its own.
Do I need a memorandum for a business angel?
Not formally: many angels decide on the deck and a meeting. But an angel investing for the first time, or a large amount, usually asks for detail, and a memorandum with a model answers those questions at once, without weeks of emails.
How is an investment memorandum different from a business plan?
A business plan describes how the business will run and suits a bank or a public programme. A memorandum adds what an investor specifically needs: the amount, valuation, stake, rights, risks and how they get their money back.
Can I use an investment memorandum template or sample PDF?
Templates and sample PDFs are useful as a list of sections, but their numbers and logic do not transfer: investors recognise a template and look for where it does not fit your business. Better to take the 12-section structure above and fill it from your own model.
Do I need a prospectus if I send the memorandum to investors?
Usually not, if the offer goes to a limited circle: qualified investors, fewer than 150 persons per EU country, or at least €100,000 per investor. Public advertising and wide distribution change that — have a lawyer check the structure before sending.
Key points about the investment memorandum
- A memorandum is a detailed document for the investor after the pitch deck: business, numbers, amount, terms, risks and exit.
- A teaser is 1–2 pages before an NDA, a CIM is a detailed document for a business sale after an NDA; a round memorandum is shorter than a CIM.
- Twelve sections: summary, product, market, unit economics, traction, team, forecast, use of funds, terms, risks, exit, appendices.
- Every number comes from one model and ties together; the round size is the cash gap to the milestone plus a reserve.
- A memorandum is not a prospectus: offers to a limited circle are exempt, public advertising is not; false statements carry civil and criminal liability.
Sources
- Regulation (EU) 2017/1129 on the prospectus — EUR-Lex; amendments by Regulation (EU) 2024/2809 (Listing Act) — EUR-Lex, overview by Cleary Gottlieb.
- Ley 6/2023 de los Mercados de Valores y de los Servicios de Inversión, Articles 34–39 — BOE.
- Capital Companies Act (Ley de Sociedades de Capital, RDL 1/2010), Article 92 — BOE.
- Spanish Civil Code, Articles 1269, 1270, 1301 — BOE; Criminal Code, Article 248 — BOE.
- Ley 1/2019 de Secretos Empresariales, Article 1 — BOE.
- Regulation (EU) 2020/1503 on crowdfunding service providers — EUR-Lex.
- Teaser and CIM: length and sequence — IMAP.
