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Critical Mass

Sigma Investment Counselors

December 6, 2019

No, this not about bombs.  It’s about investing in new and developing companies.  Investopedia defines critical mass, in a business context, as the point at which a growing company becomes self-sustaining and no longer needs additional investment to remain economically viable.

Over the last several years, a number of rapidly growing companies have entered the public market, in part, with a view to sustaining growth by attracting new funding.  Investors should seek to understand the risks associated with business models that require continuing capital infusions.  This caution will become even more important as the economy transitions away from the current, relatively low cost of money.

All comments and suggestions are welcome.

Walter J. Kirchberger, CFA

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