Investor Memorandum - Simplified

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A. Investor Memorandum defined
IM is a document that enables the reader understand a business and its viability proposition precisely

  • IM provides information for promoting the participation of stakeholders
  • IM is a strategy document, it’s a summary and hence not a detailed one
B. Aspects of IM

IM Components:
  • Business/Investment Plan + Investment Teaser + Executive Summary

Purpose: 
  • To communicate and market abusiness idea

Objectives: 
  • Seeking business partner
  • Seeking financing
  • Seeking approval for a project
  • Others

C. Business Plan
  • Marketing document
  • Targeted to a particular audience – so need to know your reader
  • Anticipate questions/concerns of target reader
  • Comprehensive analysis of the business, the market opportunity with financial plan
D. Investment Teaser
  • A developed summary of the investment concept behind an investment idea
  • 5 pages 
  • Includes the outline of the business model
  • Includes summarized financials
  • Will demonstrate that the proposal is more than just an idea
E. Executive Summary
  • A concise version of the business idea
  • 3 pages long
  • Usually first part of the business plan
    • the business concept
    • outline business strategy
    • people
    • objective
  • Can be read as a standalone document
  • Allow busy readers to:
    • get a good general idea of the business plan
    • be interested enough to spend time to want to read a full business plan
F. BP gives complete picture of…
  1. The business -What is the business ?
    • The markets -Where is the opportunity?
    • Industry forces -What are the competitive threats?
    • What are the competitive edge?
  2. Who is the team to implement the Plan?
  3. What resources are available for success?
  4. How much capital is required?
  5. What are the financial returns/rewards to investors?
Why BP is a prerequisite for any business idea?
It is the document to make the promoters think in concrete terms (justifying the potential in the business)
It prepares the Management face a number of stakeholders
  • Investors
  • Bankers/Financers
  • Government authorities
G. THE CONTENTS OF INVESTOR MEMORANDUM












  1. Statement of Purpose / Mission Statement
  2. Table of Contents
  3. Management/Personnel
  4. Business Description
  5. The Market/Location
  6. Financial Projections
  7. Financial Analysis
  8. Investment value proposition
  9. Justification
  10. Product/Service/Technology – the need
  11. Supporting Documents
  12. Limitations / Disclaimer

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