Carmichael Roberts, a rare African-American venture capitalist, considered leaving his general partnership in a private equity firm near Boston and setting up his own in 2015. He weighed whether the timing is right, with the economy still not fully recovered from the Great Recession of 2007-2009. Where to base such a firm was another factor in his decision-making. A member of the board of the National Venture Capital Association, Roberts knew the industry was gravitating to the San Francisco Bay area, to invest in the social media and software startups centered there. His specialty and passion was bringing to market new products made from advanced materials that help people solve problems in their daily lives. That investment focus on manufacturing would go against the private equity trend, another factor he considered. But he knew few, if any, general partners at major private equity firms were focused singularly on the kinds of businesses he wanted to invest in. Roberts also took into account the possible impact on his mutually respectful relations with his fellow partners. From a housing project in Brooklyn, New York, Roberts became a scientist who did advanced study at Duke and Harvard, capped off with an MBA from MIT. He had experience as a developer of technical products for Fortune 500 companies, an executive of cutting-edge startups, and a venture capitalist for eight years. This case study also reviews how private equity investment works, the private equity spectrum, the history of venture capital, stages of venture capital funds, and their location.

The Gilbert Lumber Co. is faced with a need for increased bank financing due to its rapid sales growth and low profitability. Students must determine the reasons for the rising bank borrowing, estimate the amount of borrowing needed, and assess the attractiveness of the loan to the bank. A rewritten version of an earlier case. Allows students to practice ratio analysis, financial forecasting, and evaluating financing alternatives.