

Ask HN: What's in an IM? - punnned

We're a young startup currently seeking investment from VCs.<p>What do we need to prepare - documentation wise? We've written a comprehensive business plan, an Exec summary with it and also prepared a Powerpoint Presentation. Most of the structure is based on Guy Kawasaki's advised templates/structures.<p>What now?<p>Few questions: What is in an Investment Memo (IM)? Is this required?<p>What does a VC usually require before they make a decision to invest?<p>This is the first time I've gone through this so any general advice of seeking and securing VC money is appreciated.<p>Thanks!
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jeffmould
Are you going for venture capital or an angel investment? The level of
documentation and requirements will be similar, but at the angel level the
chips are stacked more in your favor as far as getting meetings and
investment. Angels are not going to expect a minimally viable product or
traction as much as VCs will.

A few sites to check out:

<http://www.venturehacks.com> <http://www.markpeterdavis.com/>

Every VC is going to be different in what they want and don't want to
hear/see. Remember going in that the odds are against you. To increase those
odds you can show traction in the market, and at minimum a working product
(even if it is not the final product).

Angels and investors are going to want to know about your background (i.e.
school, previous work, and any startups you have done in the past).

Essentially it is a dog and pony show where you have to prove to them that you
can execute on a product and make a return on their money. While a return is
not always going to happen, the more comfortable they are with you, your
product, and the chances of making a return on their investment the better off
you are.

Get a lawyer, one who is experienced in raising outside investment. There are
laws that you must follow when seeking outside investment and having someone
familiar with the process is essential. Be ready to spend some money on the
lawyer (most lawyers will work with the intent to take their fees off the top
of the funding when finalized).

The final thing is it takes time. Keep working on your product and unless you
absolutely need money focus on your product more than raising the funds. It
could be as short as a couple months or as long as a year or so before you see
any funding. Work your connections. The best way into a VC or angel is through
connections. Cold calling/emailing is a one and a million chance of getting
someone to meet with you.

~~~
jeffmould
Oh and to answer your question about an investment memo, it is essentially a
very brief business plan (1-2 pages) detailing what the investment is for, how
it would be structured, etc... I have seen banks ask for them, but never heard
of a VC or angel asking for one.

As I said above, focus on the product not on the investment, as you work with
angels and VCs they will tell you what they want as far as documentation. The
lawyer can then help you formulate those documents. Don't over prepare you are
just wasting your time.

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arepb
I'll let someone else detail why having a comprehensive business plan isn't
necessary, but a good primer for you is the Pitching Hacks book (PDF) by
Venture Hacks. It's $9 but worth more than the sproutbean catfart health wrap
you'll otherwise spend that on. Some of the things you raise here are brought
up in their book -- which is actually more like a guidebook than a "book," per
se.

<http://venturehacks.com/pitching>

