Investment Banker, Investor, Serial Entrepreneur, Amazon #1 Best Selling Author

linkedin :Steve Kann Steve Kann, a veteran microcap investment banker (executed over $1B+ in transactions) and investor, shares how founders can successfully access public markets and build durable, investor-aligned companies in today’s tougher, attention-scarce environment.
Thank you for reading this post, don't forget to subscribe!

Interview Questions for Stephen Kann

1. Your book Microcap Magic delves into finding extraordinary returns in lesser-known stocks — what core mindset shift do you think most people miss when it comes to building long-term wealth through investing?

First, let me say that none of my responses should be taken as investment advice, and all investors should do their own due diligence and consult the professionals they work with. The biggest mindset shift is realizing that building long-term wealth is not about finding the most familiar companies, it’s about owning the most mispriced ones. Most investors anchor on size, brand, and recent headlines, so they equate ‘well known’ with ‘safe’ and ‘obscure’ with ‘risky.’ In the book I argue almost the opposite: the real opportunity is where the fundamentals are improving, the valuation is still cheap, and almost nobody is paying attention yet. That requires thinking like a business owner instead of a stock picker. You stop asking, ‘Is this popular?’ and start asking, ‘If this were a private business, what would I pay for this cash flow and growth?’ Once you make that shift, microcaps go from being lottery tickets to being small, underfollowed businesses where time, patience, and information gaps can work in your favor.” 2. You’ve seen markets from both the investor and corporate finance side. What lessons about risk management and patience have served you best over decades in finance? Two ideas have shaped how I think about risk and patience. First, risk is not volatility, it’s the possibility of permanent loss or ruin. On the investing side, that means position sizing so nothing can knock you out of the game, and assuming capital can disappear right when you need it most. On the corporate side, it means structuring balance sheets and covenants so the company can survive a bad cycle, not just the base case. Second, patience only works if it’s tied to a clear-eyed underwriting and analysis, not hope. If the fundamental drivers in the model and in the financials are tracking, you give the thesis time, even when the market disagrees. If those drivers break, you change your mind quickly. The best outcomes I’ve seen came from people willing to look wrong in the short term to be right over a full cycle, but never so stubborn that they ignored new facts. 3. For founders and everyday investors interested in financial literacy, what do you believe are the most critical early lessons they should master before making their first investments? My book provides most of these answers, but the way this question is framed is great and has caused me to consider how I present these insights:

Own businesses, not tickers – Before you buy anything, be able to explain in two sentences how the company makes money and why customers choose it. If you cannot describe the business clearly to a friend, you are not ready to risk money on it yet.
Protect the downside first – Only invest money you can leave alone for years, and start with small amounts so early mistakes are affordable “tuition.” Spread that money across several names instead of betting big on one “sure thing,” because even good ideas can go wrong.
Be skeptical of “stories” – Treat hot tips, glossy promotions, and “can’t miss” pitches as red flags until you have done your own basic homework. Look for companies that talk in specifics – revenue, customers, profits – rather than hype about giant markets and vague opportunities.
Match your timeline to the business – Understand that real businesses and especially small ones – take time to grow; prices may lag results for a while. Commit up front to judging your decision on whether the business is progressing, not on whether the stock is exciting this month.
Turn each investment into a lesson – Write down why you bought, what you expect to happen, and what would make you sell. Revisit those notes later; the habit of learning from each decision will compound far more than any single early win.

4. Microcap stocks can be misunderstood or overlooked — how should ordinary investors balance the allure of outsized returns with the higher inherent risk? Ordinary investors should treat microcaps as a high‑octane sidecar to a sturdier core portfolio, not the main engine.

Keep microcaps to a modest percentage of your assets and diversify within that slice so one blowup cannot define your outcome.
Focus only on tiny companies that are real businesses – growing revenue, improving economics, and candid management – while avoiding names that rely on promotion instead of performance.
Go in with a written, long‑term thesis and the patience to hold while the business improves, but the discipline to sell quickly if those business milestones clearly break.

5. You’ve been involved in IPOs, private placements, and M&A. How does someone building wealth through the markets benefit from understanding these deeper capital market mechanisms? Understanding IPOs, private placements, and M&A helps an investor see stocks as living capital structures, not just squiggly lines on a screen. Seeing around the headline Knowing why a company is raising money – growth investment vs. plugging holes – helps you distinguish “healthy dilution” that can create value from capital raises that simply keep a weak business on life support. When you grasp how deal terms work (pricing, warrants, covenants, lockups), you can judge whether insiders and institutions are truly aligned with you or using the public market as an ATM. Reading the microcap playbook In the microcap world, many of the big inflection points come from these events: an uplisting after a successful raise, a strategic investor through a private placement, or a buyout by a larger competitor that recognizes value long before the index funds arrive. Using structure as a risk tool Deal literacy turns complex announcements into practical decisions: you can pass on structures that overly favor new money or lenders and lean into situations where fresh capital truly de‑risks and scales the business. Over time, that ability to separate constructive from destructive capital flows is a quiet edge: it helps you avoid many land mines while still participating in the outsized returns that well‑financed, well‑structured microcaps can deliver. 6. How has financial literacy evolved since you wrote Microcap Magic, and what do you think remains the biggest gap in financial education today? How can AI Fintech platforms like InveStar make a real difference? Since Microcap Magic came out in 2015, access to tools has exploded, but the core behavioral gap the book tackles has barely moved: most people still don’t connect “buying a stock” with “owning a real business with a capital structure, incentives, and land mines.” What has improved It is much easier for ordinary investors to open accounts, trade cheaply, and pull basic financial data, which lowers the friction of participating in markets. There is more awareness that small caps and microcaps exist as a distinct asset class, and more content explaining concepts like market cap, dilution, and diversification than when the book was first printed in 2015. What remains the biggest gap The missing piece is still depth: understanding information arbitrage, dilution, and capital structure risk, rather than just memorizing terms. Most education never teaches investors how to read filings for land mines (convertible debt, toxic warrants, balloon notes, paid promotion) or how to think in probabilities and portfolio terms instead of “this one stock will make me rich.” How AI Fintech can help Platforms like InveStar can turn the playbook in Microcap Magic into guided workflows: surfacing market cap, growth, PEG, and “transitional” thresholds automatically, and flagging red-flag structures or pending registration statements in plain English. They can coach behavior, not just provide data: nudging users toward diversification, written theses, realistic holding periods, and away from tips, “hypey” press releases. 7. Can you share an example where a simple financial or investment habit made a significant difference in long-term wealth outcomes – whether for you or someone you’ve advised? A powerful but simple habit is automatic, rules‑based scaling instead of all‑in/all‑out decisions. Commit in advance to adding modestly to a position only when the business hits concrete milestones you defined up front (revenue targets, margin improvements, balance‑sheet clean‑up), and trimming when it drifts far above your estimate of value or when those milestones are clearly missed. Over time, this turns investing into a series of small, repeatable decisions that steadily move capital toward companies that are actually executing and away from those that are not, helping investments to compound despite plenty of volatility along the way. 8. Many founders struggle with balancing liquidity needs and long-term investing. What advice would you give around prioritizing savings, debt, and investment during early entrepreneurial stages? Founders, especially in the early going, are really juggling three things at once: staying solvent, staying sane, and keeping optionality alive. A useful way to frame it is to think in layers rather than products. The first layer is simple resilience: enough cash on hand that one slow month or a lumpy invoice does not force fire‑drill decisions in the business or at home. The second layer is taming anything on the personal side that quietly compounds against you – high‑rate obligations that add stress without advancing the venture. Only once those two layers feel reasonably stable does it make sense to start building a small “outside the business” pool of assets that grows in the background, even if the business is consuming most of the energy and capital. That outside pool does not need to be fancy; its job is simply to give “future you” more choices than “this company works or I start from zero again.” Thinking this way tends to nudge decisions in a healthier direction without turning life into a checklist of financial products: buy yourself some breathing room, keep the expensive leaks small, and let a separate, slow‑and‑steady wealth engine run alongside the adventure you are building. 9. As someone who has worked across corporate finance, startups, and advisory roles, what are the biggest behavioral barriers to wealth accumulation that you see among entrepreneurs and professionals? Short-term thinking disguised as “focus” Many smart professionals obsess over this quarter’s optics or the next deal, while ignoring whether the underlying business they own or work for is actually compounding value. That same mindset shows up in portfolios as constant tinkering – buying what just worked and bailing at the first sign of trading weakness – rather than owning a well‑researched basket long enough for an information edge to close. Overconfidence in single bets Entrepreneurs often assume their company is their retirement plan, so they resist diversifying personal wealth until very late, effectively running a one‑stock portfolio with career, time, and capital all on the same number. Professionals do a quieter version of the same thing when they let one hot stock, one sector, or one type of deal grow into an outsized position because “this one is different.” “Story first, fundamentals second” thinking People fall in love with narratives-market size, vision, brand-while paying little attention to capital structure, dilution, or the actual terms of financings, which is where a lot of value gets transferred away from them. The result is owning pieces of good stories on bad terms: great upside on paper, but constant leaks through convertibles, warrants, or obligations that were never fully understood. Failing to have rules and sticking to them Very few take the time to define simple personal guardrails: how concentrated they are willing to be, what would trigger selling, or how much of income will consistently flow into long‑term assets. Without those guardrails, decisions get made in the heat of the moment – when fear or euphoria – or greed – are loudest – rather than in a calmer, disciplined businesslike way. 10. Looking forward, what trends or opportunities do you think will have the greatest impact on wealth building — especially for investors and founders coming from underrepresented or emerging market backgrounds? Two forces look especially powerful for wealth building in the coming years: broader access to tools once reserved for institutions, and the opening up of ignored corners of the market. Democratized tools and information High‑quality data, analytics, and education are becoming cheap and widely available, shrinking the historical edge that came purely from “being in the room” at big firms or in major financial centers. For underrepresented founders and investors, that means it is increasingly possible to run real screens, understand capital structures, and study case studies without needing a Wall Street badge – exactly the kind of independent homework my book argues is key to exploiting information arbitrage. Underfollowed markets and niches The basic thesis that small, obscure, under‑researched businesses can massively outperform when their stories become more widely understood is even more relevant in emerging markets and overlooked communities. Investors and founders who deeply understand local problems and small, fast‑growing companies – yet are willing to apply disciplined microcap-style analysis, diversification, and patience – are positioned to benefit as capital slowly discovers those opportunities. New capital-formation rails Crowdfunding, specialized micro‑VCs, and lighter‑weight listing venues are creating more paths for smaller, geographically diverse companies to raise capital and eventually access public markets. AI as a “second set of eyes” For investors and founders without legacy networks, AI-driven platforms can serve as an always-available analyst: highlighting red flags in filings, translating jargon into plain language, and helping compare a local company to global peers. Used well, it becomes easier to do real homework, avoid land mines, and stay focused on business quality and terms rather than on promoter hype or exclusion from traditional gatekeepers.

Key Takeaways

Here are concise, reader-facing key takeaways you can use:

Steve Kann has over 30 years in capital markets, specializing in microcap and small-cap companies, IPOs, uplistings, and strategic advisory for emerging growth businesses.[linkedin]
He currently leads U.S. investment banking at ArcStone Securities and Investments Corp., focusing on tech, fintech, biotech, cybersecurity, and energy companies in the 50–500M market cap range.[linkedin]
Through Ocean Street Partners, he invests in and advises high-growth private and small public companies, helping founders navigate from early capital raises through IPOs and other exits.[linkedin]
His core message for founders: public markets are still powerful for wealth creation, but they require readiness on governance, storytelling, investor relations, and long-term shareholder development.linkedin+1
He emphasizes that today’s microcap environment is attention-scarce: companies must build credible visibility, avoid “promotional hype,” and focus on fundamentals plus consistent communication with investors.chaincatcher+2
For fintech and cross-border startups like InveStar, he underscores the importance of: clear regulatory posture, proof of product–market fit, realistic valuation, and a roadmap from private to public capital.linkedin+1
He views aligned, long-term investors (family offices, specialized funds, sophisticated retail) as key partners, and advises founders to choose capital that matches their time horizon and risk profile.linkedin+1
A recurring theme of the interview is democratizing wealth creation: enabling more founders and everyday investors to participate in the upside of small, innovative companies that historically flew under the radar.linkedin+2

Disclaimer: This interview is part of InveStar’s mission to make financial literacy, investing, and wealth-building accessible to the next generation of global investors. This article is for education purposes only.

Investment Banker, Investor, Serial Entrepreneur, Amazon #1 Best Selling Author