Carofin’s Due Diligence Checklist

When conducting Carofin’s and its affiliate's due diligence on a prospective issuer (and consequent private offering), Carofin’s investment bankers and analysts follow a process that has been codified over the last 25 years. The following Due Diligence Checklist is our template that we’re delighted to share. Download Due Diligence Checklist More >

Carofin’s Due Diligence Checklist2022-10-11T09:03:53-04:00

Liars Aren’t Trustworthy — Surprise!

Our parent company has decades of experience structuring private credit for investors, so we sourced a few suggestions for those looking to capture high returns by lending money to companies.  Several years ago, a small import/export consumer goods company approached us to raise capital to build inventory.  In the course of conducting our due diligence, we discovered that the More >

Liars Aren’t Trustworthy — Surprise!2022-06-23T15:06:29-04:00

Lessons from a Pro Player Turned Entrepreneur

Would you expect a pro football player to become the CEO of a successful cosmetics company?  We didn't.  But, then, we listened to his story.  And it made sense. This is an interview by Bruce Smith, Carofin’s Vice President of Investor Development, with Chris Kolodziejski, CEO and Founder of Mosaic Distributors, a developer and distributor More >

Lessons from a Pro Player Turned Entrepreneur2022-06-23T15:10:51-04:00

Identify a Market Opportunity (1st principles of investing)

Consistency is critical in our business.  When it comes to investment analysis, this “First Principle” – “What primary market opportunity is the issuer pursuing?” – is the first question successful investors apply in their consistent approach to company analyses.   Identifying the fundamental rationale for an enterprise is central to helping retain your focus on the ball.  It’s what we consider first before bringing More >

Identify a Market Opportunity (1st principles of investing)2020-12-08T15:01:53-05:00

Overcome a Challenge (1st Principles of Investing)

We all have challenges to overcome. But, when it comes to private investments, understanding the challenges a business must overcome in order to capture a market opportunity is fundamental when considering an investment in that company. In our series of articles on First Principles, we show you how to easily define the basic elements of a More >

Overcome a Challenge (1st Principles of Investing)2021-04-20T09:07:54-04:00

What do Aristotle, Charles Munger, and Thomas Edison have in common?

They all use something called First Principles to simplify complex problems. We use them for analyzing private investment opportunities. You might be surprised at how simple, yet effective, it can be.  Investment analysis can be highly challenging.  Each Issuer of securities (the company seeking your investment) is likely rather unique and is different from the previous company you analyzed. More >

What do Aristotle, Charles Munger, and Thomas Edison have in common?2020-12-08T15:26:19-05:00

Provide a Solution (1st principles of investing)

To provide value (and generate income as an individual or a business), you need to solve a problem for someone.   It’s actually why we get out of bed every day and go to work. If a company you’re looking to invest in doesn't do the same, it’s likely that company will fail.  In this series of articles on First Principles, More >

Provide a Solution (1st principles of investing)2022-05-17T15:10:27-04:00

Defaults: being reasonable can be rational

It may seem clear at first – your tenant (Jeff) signed an iron-clad lease.  Now, he hasn’t paid rent for 2 months. So, do you go through the time-consuming (and, oftentimes, expensive) process of an eviction, hoping you land a new (paying) tenant quickly, or is it more reasonable for you try to fashion a deal — one that never was envisioned in the rental agreement? More >

Defaults: being reasonable can be rational2020-12-08T15:31:51-05:00

Does the early bird always catch the worm?

Have you ever observed someone who is always busy? He comes into the office early and leaves late, but he never seems to deliver projects on time?  It’s likely that psychologists have a name for this “syndrome.” When you’re considering whether a management team deserves your investment, however, this may be a material factor in More >

Does the early bird always catch the worm?2020-12-08T15:36:07-05:00

Painting Shoes and Private Debt

My grandson asked me whether he should “give” some money for six months to some other 8th graders who had started a shoe painting business. No, I didn’t make that up.  It reminded me of conversations we have every day with investors about loans to private companies.  Without drawing too close a parallel, you’d probably More >

Painting Shoes and Private Debt2022-06-23T14:55:17-04:00

One Person Can’t Do It All

History is replete with famous, even eccentric, successful entrepreneurs.  But the great ones also had the capacity to motivate others to do their best, to make great personal sacrifices for the company and to stay the course during tough times (e.g., Steve Jobs).    Before making an investment in a new venture, ask whether a capable More >

One Person Can’t Do It All2020-12-08T15:47:19-05:00

Venture investing succeeds when the entrepreneur knows its customer

Psychology plays a massive role in a customer’s purchasing behavior, and consumer products companies take advantage of this. Obviously, this is not news, but any company in which you invest must have a clearunderstanding of what motivates potential customers to buy their products.    Are you sure that the company’s buyers are just as motivated to buy as you are to invest?  Consider carefully the More >

Venture investing succeeds when the entrepreneur knows its customer2022-06-23T15:36:12-04:00

How realistic is your sales pipeline?

A freight train without a track ahead is just 200 tons of metal.  Until a new Venture has distribution channels and a robust pipeline, it's basically the same. One important aspect to determine when evaluating the future prospects of a company (and the investment you are considering) is whether the company has “laid the track” for More >

How realistic is your sales pipeline?2022-06-23T17:34:20-04:00

Has the entrepreneur (you funded) ever tangled with the competition?

Are there other businesses vying for the same sale and/or aggressively protecting their turf?  Competition can limit a new venture’s success — and your investment return.  So be aware of other businesses — or the status quo — before investing.  There’s good news about the competition!  More businesses are educating customers on the buying opportunity.  Unfortunately, the company must convince customers More >

Has the entrepreneur (you funded) ever tangled with the competition?2022-06-24T09:13:36-04:00

Are they ready to scale?

Any new venture can project growth.  Before investing, check the practical realities that support the 10x, 100x, 1000x growth.  All too often, the relatively mundane is ignored during the analysis process - the unexpected “snakes in the grass” often seriously derail business growth.  In general, businesses which are manufacturing a physical product are much more challenging to scale.  This is, in part, More >

Are they ready to scale?2020-12-08T15:55:09-05:00

Is this the entrepreneur’s first rodeo?

Let’s start with some facts: In year one, 20% of small U.S. businesses fail.  By the end of the 5th year, 50% do so.   Throw in a newbie entrepreneur, and those statistics may be generous.  Studies have pointed to a myriad of reasons; no market need, ran out of cash, and a wrong team rated high on the list..  Here’s a fundamental More >

Is this the entrepreneur’s first rodeo?2022-06-24T09:36:45-04:00

If you’re going to sell something, you ought to have something to sell.

You may not remember what was happening in information technology around the turn of the century (It’s known as the “The dot-com bubble”).  For many people, the lesson we’re talking about in this article was learned the hard way.  According to FactSet, in the early part of 2000, IT constituted close to 35% of the Market More >

If you’re going to sell something, you ought to have something to sell.2022-06-24T10:51:55-04:00

New Product + Market Disruption = One Tough Investment Decision

If what you are investing in “rocks the world,” be prepared for the company to face unexpected challenges convincing customers.  Double any timeframe presented as well as the cost of success.    Significant sales will take longer (see  Crossing the Chasm by Geoffrey Moore) and cost more per early customer.       In our series of nine questions to ask before investing More >

New Product + Market Disruption = One Tough Investment Decision2022-06-24T11:10:26-04:00

Customers, or a lack thereof

Sure, there may be 7 billion people in the world with close to 14B legs, but how many of those individuals will stop what they’re doing and switch to this company’s brilliant new brand of pants? Customers, or a lack thereof.  It’s why businesses thrive or eventually fold. Every business plan projects ever-increasing sales (often exhibiting More >

Customers, or a lack thereof2020-12-08T16:34:50-05:00

Primary Investment Considerations (or First Principles)

Investment analysis can be highly challenging. Each Issuer of securities (the company seeking your investment) differs in significant ways from others, and it’s easy to miss “the forest” for a few particularly compelling “trees.” Therefore, it is essential that you apply a consistent approach to your analysis that first identifies the fundamental rationale for an More >

Primary Investment Considerations (or First Principles)2022-01-19T09:03:50-05:00

Seven Questions for Evaluating a Private Company

After evaluating thousands of unique private companies and alternative investments over the past 20 years, we have created this list of fundamental investment considerations for our use, and we are happy to make it available to you.     If you want to dive further into the Seven Questions framework, our complimentary white More >

Seven Questions for Evaluating a Private Company2022-01-19T09:23:21-05:00

What is a Balance Sheet?

Accounting 101 – Not your best subject.   But, if you intend to invest in a private company, spend a few minutes on these crib notes. They may save you a bundle down the road.  More >

What is a Balance Sheet?2023-01-25T16:41:46-05:00

Why Do Companies Use Debt Financing?

The following outlines the major reasons why businesses may choose to use debt financing over issuing equity when capital is needed. Businesses and other entities can finance their enterprises by issuing equity or using debt, such as borrowing funds through loans or by issuing notes.  Unlike equity, debt has a specified interest rate and a schedule of dates when interest is to be paid and all the principal fully repaid.    Many fast-growing companies would prefer to use More >

Why Do Companies Use Debt Financing?2022-04-11T10:53:59-04:00

Private Lending to Operating Companies

You don’t need to be a genius to understand what happens when you lend money to a private company, but there are important things you need to know. Let’s take the mystique out of private loans! More >

Private Lending to Operating Companies2022-07-01T08:44:07-04:00

“Due Diligence” and Investments: What Do I Really Need to Know?

It’s hard enough keeping this baby in running condition. But, to get the best performance, you work with your mechanic closely, asking additional questions, avoiding risks where you can.  While you rely on your mechanic, it just makes sense for you to have a deeper understanding… The same should be true of your investments.  Here More >

“Due Diligence” and Investments: What Do I Really Need to Know?2022-03-25T15:45:56-04:00

Due Diligence for Private Business Investment Opportunities

The following outlines the importance placed upon careful, independent Investor analysis of private market investments. “Due diligence” is a process whereby Investors evaluating a potential investment conduct independent analysis and verification of the information presented to them by the Issuer. Due diligence analysis goes beyond simply reading the Offering documents, such as a Private Placement More >

Due Diligence for Private Business Investment Opportunities2020-12-18T10:44:27-05:00
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