Decision
How to write a PASS memo (and why you should)
Most managers write memos only for deals they're doing. That's a mistake. You pass on 95%+ of what you see, and the record of why is one of the most valuable things a fund builds. A good PASS memo makes your judgment auditable, lets you re-open a deal when the disqualifier clears, and — sent kindly — earns the founder goodwill that feeds your deal flow. Here's how to write one.
A PASS is a decision, not a rejection letter. The discipline below is the same one behind an INVEST memo — you just conclude the other way.
Why a decline deserves a memo
- It makes "no" auditable. Six months later you can tell a deal you correctly avoided from one you fumbled. Without a record, every pass looks the same in hindsight.
- It's re-openable. Most passes are conditional — "too early," "price too rich," "IP not assigned yet." Write the condition down and you'll know exactly when to look again.
- It compounds your reputation. A specific, respectful decline is rare. Founders remember it, and the best of them send you the next one.
- It trains your screen. Passes are data. Patterns in why you decline are how you sharpen your thesis over time.
The two kinds of pass
Before you write, know which pass this is — because they read differently and re-open differently.
| Soft pass (judgment) | Fatal pass (structural) |
|---|---|
| Price too rich vs. comps · traction too thin for the stage · market too early · not a fit for your fund's construction. | Undocumented / messy cap table · unresolved co-founder conflict or departed-founder overhang · IP not assigned to the company. |
| Re-openable when the condition changes — a lower price, another two quarters of retention. | Caps the recommendation at PASS regardless of how strong the rest looks — these are the items that blow up in confirmatory diligence. |
The stage-weighted scorecard encodes exactly this: fatal red flags force a PASS no matter the score, while soft weaknesses just lower the band. That logic is the spine of a clean decline — the scorecard tells you which kind of pass you're writing.
What a PASS memo contains
It's the same 8-section structure, but you don't have to write all of it. A tight PASS covers four things:
- The call, up front. "PASS." One word, no hedging — same discipline as an INVEST. If you can't say it cleanly, you haven't decided.
- The one or two decisive reasons. Not a laundry list. Name the specific thing(s) that drove the no — the disqualifier, not every minor nit. If it's a fatal flag, say so.
- What would change your mind. The re-open condition, concretely: "revisit at $12M pre or below," "revisit once IP is assigned and two quarters of net-revenue retention above X are shown." This is what turns a dead end into a tracked opportunity.
- What you liked. Briefly. It keeps the record honest, and it's the part you'll send the founder.
An INVEST memo's job is to justify wiring money. A PASS memo's job is to make the "no" reversible on new information. If your memo doesn't say what fact would flip it, you've written a rejection, not a decision.
A worked shape
Call: PASS — soft, re-openable.
Decisive reason: Valuation is materially above comparable seed rounds ($28M pre vs. a $14–18M comp band) with no traction to justify the premium; scorecard lands "Watch" once the valuation flag is applied.
Would change our mind: A round at or below ~$18M pre, or two more quarters showing the retention that would justify the current ask.
Liked: Genuine founder-market fit and a credible "why now." Worth tracking.
That's a complete PASS. It's honest, it's specific, and in six months it tells you exactly whether to re-engage. Our kit ships a full worked PASS of this kind (a fictional company) so you can see the whole thing, not just the skeleton.
Sending it to the founder
Send a short, kind version — the one or two reasons and the re-open condition — never the full internal memo. Two sentences of specific feedback from an investor who clearly did the work is something founders almost never get, and it's one of the cheapest ways to build a reputation that improves your inbound. A vague "not a fit right now" costs you that entirely.
See a full worked PASS memo.
The kit includes three fully-worked sample memos — one of them a reasoned decline — plus the 8-section template, the stage-weighted scorecard with fatal-flag logic, and the cap-table / return model.