Why a framework, and why this one.
Investment frameworks are usually treated as internal documents. We treat ours as public for two reasons. First, our partners deserve to see how we make decisions before they entrust us with theirs. Second, the discipline of writing the answers down in a format that can be read by people who are not in the room is the discipline that makes the framework useful.
Every potential investment we consider has a "Five Questions Memo," a short document that answers the same five questions in the same order. The memo travels with the investment. If our answers change, the memo is updated and dated. If a portfolio decision later goes wrong, we re-read the memo first.
Question 1. Who is served?
The first question is the most important and the most often skipped. Every product, platform, or piece of infrastructure serves a specific population well. We require the memo to name that population concretely. Not "users." Not "small businesses." Not "the public." A specific, identifiable, describable group of people, with their use case and their relationship to the asset spelled out.
If we cannot fill in this answer in three sentences, we have not understood the investment well enough to make it.
A "served" population is not the same as a "customer" population. The customer pays. The served population uses, depends on, or is affected by the asset. Sometimes they overlap. Sometimes they do not. Our memo distinguishes them.
Question 2. Who is harmed?
The second question is the one most investment frameworks omit entirely. We require the memo to name, explicitly and by population, who is made worse off by the asset's success. This is not a hypothetical exercise. Every investment harms someone, at minimum the competitors, but often a much broader set: workers displaced, attention captured, externalities produced, alternatives crowded out.
The point is not to refuse to invest in anything that produces harm. The point is to make the harm visible, weigh it against the served population, and govern accordingly. If the harms are concentrated on a population that has fewer rights or resources than the served population, we walk away or we change the structure of the investment until that is no longer true.
We do not invest in assets whose harms scale faster than their benefits.
Question 3. What is the time horizon?
The third question is structural. How long does this asset need to be held to deliver on the value it claims? Six months? Three years? Twenty?
The memo names the horizon and the holding form is matched to it. If the asset needs twenty years of patient operation, we hold it on a twenty-year horizon. If it needs three, we hold it on three. What we do not do is hold a twenty-year asset on a three-year horizon and pretend otherwise. That is the structural mistake the venture model is most prone to, and we will not repeat it.
We are willing to invest in assets that look fully priced today, if their time horizon and ours are aligned.
Question 4. Where does the value go?
Value goes somewhere. Our memo identifies the destinations.
It goes to the served population in the form of utility. We try to quantify what they gain.
It goes to the operators in the form of compensation, equity, and tenure. We name the cap-table allocation and the compensation philosophy.
It goes to us in the form of investment returns. We name the expected hold period and the realistic distribution shape.
It goes to the public benefit class in the form of our standing Class C allocation. We name the dollar or percentage commitment for the year.
It goes to the public commons in the form of standards work, open-source contribution, or editorial publishing. We name the contribution.
If value is going only to us and to the operators, we do not have an investment that meets our framework.
Question 5. What happens if we are wrong?
The last question is the discipline that closes the loop. Every memo names two failure modes: the soft failure (we held the asset, it did not perform as expected, we exit) and the hard failure (the asset produces harms we did not anticipate, at a scale that demands intervention).
For each failure mode, the memo names the trip-wire, the observable signal that tells us we are in it, and the response. The response is named in advance, not improvised. For hard failures in particular, the memo identifies whose interests we will prioritize and whose we will subordinate in a wind-down.
The point of naming this in advance is that, in the moment, we will not be at our best. Our future selves will be tempted to rationalize. The memo is the agreement our current selves make with our future selves about who we serve when the framework is tested.
How we use the framework.
The framework is used three times in the life of every investment.
It is used at diligence, when the memo is first written. No investment closes without a memo.
It is used at review, on a defined cadence (quarterly for active investments, annually for long-hold positions). The memo is re-read, and any answer that has changed is updated in writing.
It is used at exit or wind-down, when we ask the framework's harshest question: did the investment deliver on what the memo said it would, and if not, what did we get wrong?
The framework is not a moral filter. It is a discipline. It does not make us right. It makes us legible, to ourselves, to our partners, and to the founders we work with.
An invitation.
If you are a founder evaluating capital partners and the Five Questions sound like a conversation you want to have, we would like to know you.
About the author.
Justin O'Mara Henning is the founder of Human Centered Holdings LLC.