Base Case

The outcome an investor considers most likely, as opposed to the optimistic or pessimistic scenarios.

Example

Revenue grows 40% a year for three years and the company is acquired at a moderate multiple.

Base cases drift optimistic because the person writing them wants the deal. Ask whether a neutral reader would call it the likeliest outcome.

Bear Case — The most plausible version of how an investment goes badly, argued seriously rather than as a token risk section.
Investment Memo — A written document setting out the case for and against an investment, the key assumptions, and the reasoning behind the decision, prepared before money moves.

A projection is tested against the company's own history — Financial projections are most useful when compared with what the company has actually achieved and run through downside scenarios that show when cash would run out. (11 min)
Four sections decide the vote; the rest is context — A memo can run to fifteen pages and still be decided on four of them - the thesis, the bear case, the return math and the terms. Everything else is background that makes the reader feel informed without changing the answer. (11 min)
The memo is worth more at the two-year review than on the day you wrote it — A memo's real value is not in getting a deal approved. It is in being specific enough, on the day it was written, that reading it again later tells you something you could not otherwise have known. (10 min)