The easiest way to understand what a deal memo is, and why it’s important, is to discuss the greatest deal memo ever publicly released: a young Roelof Botha’s passionate, and well-reasoned, plea to invest in a video startup that was burning money, had come after a dozen previous failures doing the same thing, and had massive legal risks. That startup was called YouTube and it made Sequoia over $500 million. In his deal memo, Botha included the following sections: Introduction, Deal, Competition, Hiring Plan, Key Risks, and a Recommendation.
