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 Capitalization of the S&P. And, in about a year and one-half, when the...
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 in a new venture, ask...
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 a hockey stick growth line), but can the company truly...
We were approached by a small company in the consumer goods business looking to raise capital to build inventory. It’s true, experience is everything, and we’re game to share. In our normal course of conducting due diligence, we discovered that the owner of the company previously had exited and sold another business and, rather than pay federal taxes, he had used the proceeds to improve the...
If you’re thinking of crooning “Blue Skies,” you’d be in the right state of mind. That’s because each state has its own state Securities laws, or “Blue Sky” laws, that further protect Investors from Securities fraud. Here’s a brief overview of what those laws do for you. In other articles, we’ve discussed federal Securities laws - the Securities Act of 1933 and the Securities Exchange Act of...
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. You may remember, from your freshman year accounting class, that there are three main financial statements that any Company needs to maintain: the Balance Sheet, the Income Statement, and the Cash Flow Statement. We’ll...
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 are a few guidelines to help keep your alternative investments...
The Federal government, and its regulatory agencies, are hard at work protecting investors. Here’s a handy précis of the rules and regulations that Issuers follow when introducing Private Placements. There is a broad body of law and regulations governing public Securities. What surprises many is the extent of the same for private Securities. Let’s review some of the principal laws and...
In the interest of accessibility, here are some terms that any investor should be familiary with.
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