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 deciding against committing capital. Carofin’s affiliate, Carolina...

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 help him think through the same questions that a wary investor approaches...

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 team has been assembled (Sales, Marketing, Operations,...

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 clear understanding 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...

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 current and future sales.  Actively managing a sales pipeline is...

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...

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 that are manufacturing a physical product are much more challenging to scale.  This is, in...

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, running out of cash, and a wrong team rated high on the list.  Here’s a fundamental truth that we embrace at Carofin: You must believe in the...