What is this?
Different firms with different focuses will have wildly different approaches to writing investment memos. The core idea is the same: a deal team will do work on an investment opportunity and then summarize their learning for the broader team to get up to speed. The output can range from a few slides with mostly visuals to 100+ page memorandums drilling into every aspect of a company and market.
Learning to Synthesize Your Learning
The purpose of
Build a Latticework Around The Category
In reference to gaining knowledge,
As you build this latticework through reading, having conversations, and testing things out you'll start to feel a level of competency with any subject. The goal is to start to consciously map this latticework.
Your latticework will start to feel complete when you hear new things about the market or company and immediately understand right where it should go in the framework you have for yourself.9
It's kind of fun to sit there and outthink people who are way smarter than you are because you've trained yourself to be more objective and more multidisciplinary. Furthermore, there is a lot of money in it, as I can testify from my own personal experience.
Simplify & Intensify
It's important for you to have a broad collection of resources and notes from all the things you've watched/read and people you've talked to. But in order to effectively communicate what you've learned in a coherent investment thesis you need to start to synthesize your idea down to the most important and impactful pieces.
People like to think that if they just take a lot of notes and have a massive collection of links and screenshots then they know something. The critical part is understanding what all that information means. Once you've collected all that information you need to turn it into meaningful takeaways and ask yourself: "Therefore, what?"
“One of my companions, an apprentice Hatter was about to open shop for himself—his first concern was to have a handsome sign-board, with a proper inscription. he composed it in these words ‘John Thompson, Hatter, makes and sells hats—for ready money,’ with a figure of a hat: but he thought he would submit it to his friends for their amendments. [After a number of edits,] his inscription was reduced ultimately to ‘John Thomson’ with the figure of a hat.” (Benjamin Franklin)
Why books don't work
Books are easy to take for granted. Not any specific book, I mean: the form of a book. Paper or pixels-it hardly matters. Words in lines on pages in chapters. And at least for non-fiction books, one implied assumption at the foundation: people absorb knowledge by reading sentences.
Learning in Public
One final piece of really summarizing your learning is to put it out into the world and get reactions. This can be sharing your ideas with others at your firm and getting their reactions. Or if you don't have that type of setup you can share your investment themes publicly online. Creating a personal website and a presence on social media gives you an outlet to share your ideas and have people react to them both positively and negatively. Doing that pushes your learning to deeper levels. Not to mention the fact that building that personal brand online is becoming more and more critical in setting yourself apart in an ocean of people who may seem similar to you.
How to Write A Memo
Telling a Story
The Investment Memo | NextView Ventures
A one to two page summary which provides an overview of the company and our thesis about investing. It's something that perhaps especially most of our peer seed venture firms don't (always) do, but writing an investment memo has been a key component for NextView since the very beginnings of our firm.
Y Combinator Investment Memo Template | Visible.vc
Raise capital, update investors and engage your team from Visible. Use the YC Investment Memo Template to get started. Memos are a clear and concise document to lay out strategic vision, rationale, and expectations (in case you missed it, we wrote about the importance of memos earlier this week).
- Kerrisdale Capital is a hedge fund that discloses every investment memo
- https://nic.nebraska.gov/sites/nic.nebraska.gov/files/doc/9.d. Rockwood XI - Rockwood.pdf
Other Examples To Evaluate
- "Bootstrapped" Capital