With the multitude of alternative investments available nowadays, where does one begin to develop a fundamental understanding of a potential investment…even before conducting due diligence? At the beginning! First credited to Aristotle and now widely used in the scientific community, First Principles is an approach that is also applicable to financial analysis. It poses three simple questions that may seem overly simplistic as part of a financial analysis of private debt and equity investments but is nevertheless essential to fully understanding an investment opportunity. First, what is the business opportunity is being pursued? Second, which challenges is the business likely to face as it pursues this opportunity?Finally, what is the most logical and economically attractive approach to the opportunity that considersthe challenges identified? This simple approach, while fundamental to financial analysis of a potential investment, should also include thorough due diligence on the Issuer and the offered securities.