Investment Memorandum

1.85 million apps are available for download today. There are hundreds upon hundreds of companies that are looking to create the next big thing. You and your company might be one of them, but the first step in securing funding to get such a project off the ground is capital.

With any kind of startup, capital comes after you’ve been able to generate interest in the ideas and direction that your company is moving in. But, how exactly can you increase the interest of investors without bombarding them with an over the top business plan?

We’re going to detail how to create an investment memorandum that will get to the point of your project mission and help you gain the capital that you need moving forward.

What is an Investment Memorandum?
As we stated before, investment memorandums are like business plans, but everything is laid out concisely. In this plan, you’ll document the project that you’re looking to launch.

You’ll also detail what you expect from those that seek to invest in this app investment and the mobile app details and the strategy you will use to achieve your goals. The memorandum will clarify what your vision is to those that aren’t able to hear your thoughts.

An effective memorandum will help investors decide to either invest or ask for more details before making their final decisions. Now that you’ve gotten a better understanding of what an investment memorandum is, we can now move on to the essential pieces that should be apart of your investment document.

Purpose of the Memo
This section is essential to help investors understand why they should care to invest in your project, to begin with. It should also clarify the project’s purpose, and that’s to gain capital to create a killer mobile app.

When drafting the purpose section of your memo, please ensure that you use clear and concise language. If an investor begins reading and their already confused it’s likely that they may be completely turned off to reading through the rest of the memo if that’s how it’s starting.

Make your purpose known off the bat and set the tone for what investors can expect to see throughout the memo. The purpose is like the introduction of a good story; if it doesn’t leap off the page readers will just close the book and choose another one to read.

If you don’t know your purpose quite yet, it’s helpful to discuss things with your team and define your project goals. These goals will help you centre in on the driving ambition and the reason you began this project in the first place.

What’s the Issue?
The next section should discuss what you’re having problems with and where the investors can provide their help. You should detail the capital you need to begin the project and how you intend to raise it.

This is called your plan of attack. Investors want to see that you have a plan that goes far beyond simply asking them to invest without any way of gaining more capital as you continue with the project.

Detail the strategy you intend to use and how you will resolve this friction point in the plan.

Explain the Market Size and Potential Competition
When it comes to business, you’ve got to conduct market research because it’s likely that you won’t be the only one trying to create a product in your niche. You’ll want to include the research you found and provide details about how you plan to infiltrate the market.

How are you going to get people to look your way amongst all the other competitors? Part of the research that you perform should surround what the competition is doing.

Make a note of the areas that your competition has failed in and the areas that they’ve proven to be successful at. Providing this information to investors will further support that you’re taking your project seriously and that you’ve thought about how to make your mobile app stand out against other apps.

Product Details
Now here is the part you’ve been waiting for, you get to tell them about the product you’ll use their investment to launch. What makes this product something to celebrate?

What stage of the product invention are you in? Who will purchase this product? What’s the purpose? You’ll provide all this information and how the capital that you’re raising will contribute to the future processes needed to continue perfecting the application.

What is the Marketing Plan?
With any product, you can’t just put it on the market and hope that people will buy it. Marketing is involved in helping spread the word and increase consumers’ interest in the product you are about to launch.

At this point in the memo, you need to layout the marketing strategy you’re going to use to promote your product. It would help if you also outlined your expectations as far as sales go and how you plan to distribute the product most cost-effectively.

Marketing and distribution cost money. When you’re in the beginning stages of creating a product you need to find the most efficient ways to save money on the front-end until you began making revenue and can increase these various sectors of the business.

Whose on the Team?
Unless you’re creating and doing all the work yourself the chances are that you’ve created a team to help with the project and every step of the process. You’ll want to detail each member of your creative team and how they are an asset to your project.

What makes them talented? What makes them capable of executing such an extensive project with this type of capital on the line? This helps the investors to continue building confidence in you, your team, your project, and the vision.

If you’re not able to make them believe in the project and understand how it will benefit them in the long run (make them money) the chances that they will invest in the project are slim. This section is to sell your team and show that you’re not messing around you’ve surrounded yourself with the best of the best to help get things started.

Data Analytics
Have you already done a test run with the product? What data analytics were gathered during the initial test run? What modifications were made to the product after data was collected?

Did the data get you closer or further from your end goal as it pertains to the product in question? Data analytics are an essential part of creating and finishing products. Even after you’ve delivered a product to the consumer, you’ll still have an ongoing process where data will be collected to improve that product.

When you’re meeting with investors, they want to know that you’ve already begun testing and improving the product. It would help if you detailed your findings and the changes you made to the product to ensure that it runs smoothly.

They also want to know how close you are to launching the product without any issues. Why does the launch date matter you might be wondering?

The longer a product is in production, the more resources and funds are needed to support the material required for this product. That means investors unless you find capital elsewhere will need to continue funding your project.

While some investors might be okay with this initially, they do want to see the finished product of what they’re paying for and see how it’s going to work for them in the end. No investor wants to feel as if they’ve wasted their money on something that was never going to work.

Creating an Investment Memorandum: You’ve Got Mail
Creating an investment memorandum can be much simpler than you initially thought it was. That’s only if you’ve got the knowledge to ensure that each section is clear about your mission and continues to pique the interest of those you’re seeking investment from.

If you’re looking for a team of talented individuals that know what it takes to create the next and new exciting digital app contact EB Pearls. For the last 15 years, we’ve grown into one of the leading agencies for all things digital in the Sydney area.

If you want to be sure that your project is in the right hands, you know what to do. We’re waiting to hear from you and want to help make the mobile app that you’ve envisioned come to life in the most efficient way.