I am also working on a new fund. It is one of the most exciting periods of history for entrepreneurs and investors. The opportunities are so abundant and capital is available for good ideas. If you are going to be an entrepreneur, now is the time to do it. The most difficult aspect of investing in a small business is trying to guess what the earnings potential is for the company and to determine if the management team can make the projections happen.
Investors wear two hats.
One is the MBA hat that you use to analyze the business. You crunch the numbers for the business and evaluate the industry. The other hat you put on is psychologist. You try to get inside the head of the entrepreneur and members of the team and determine if they have what it takes to make it happen. Both aspects of investing are critical.