Entrepreneurs Are You Ready To See If Your Worth Your Salt? This guide explains more about Search Funds. If your needing structure. Search Funds may be a unconventional option for you.
Let us define Search Funds.
How many search funds are there? Irving Grousbeck, a professor at Stanford University’s Graduate School of Business, who originated the concept in 1984 while lecturing at Harvard Business School. Since then, it is estimated that 627 traditional funds have been or are currently being formed, with 198 operating currently.
Good day to all the visitors who showed up to read the Investment Fund advice. I genuinely would like to Thank you. Your here probably because you have an interest in Search Funds for Entrepreneurship through Acquisitions. Let’s get down to Brass Tax and open up with the two types of Search Funds I am privy to.
- Self-Funded Search Funds
- Investment Fund Backed Search Funds
- Private Equity Funded Search Fund
- Private Individual Funded Search Fund
Both are polar opposites from each other. And honestly I have to be straight with you here. If your serious and backed by a well funded Private Equity Firm? I do not feel you will have to work as hard as a Scrappy Entrepreneur who is self funded. That’s my opinion. However I guess the old stand by should be suggested. Warning “RESULTS MAY VARY.” I hope you get chuckle. You are out searching or are about to begin your search for a Company to approach and acquire? In all seriousness there seems to be some assumptions that I am going to address to set up your expectations.
Self Funded Search Fund
I feel the well funded entrepreneur should out perform the scrappy entrepreneur. Because the scrappy entrepreneur who is not as well funded may have to work harder or longer. But! Just because an Entrepreneur is well funded? Doesn’t prove he or she will out perform the poorly funded or scrappy entrepreneur. There are to many variables at play in this analysis.
Self Funded Entrepreneurs are exactly just that. They’re using their own money to cover costs of being on the road and traveling while searching. Usually these entrepreneurs are incredibly resourceful using self taught street smarts and pure hustle to achieve their goals. Uncertainty and being uncomfortable are normal operating environments.
Traditional Search Funds
What is a traditional Search Fund? These are funds that are funded by wealthy private individuals or investment funds including Private Equity Partners. If we really consider the roots of Search Funds. The model originated at Stanford Graduate School of Business in California. A few Stanford Alums raised some funds to search for an Acquisition.
In conclusion wether your funded by a wealthy Private Individual or secured funding from a Private Equity Firm. Search Funds are defined differently by different experts. As I had mentioned earlier “Results may vary.” There are no metrics to discern which entrepreneur will be successful. However from the research I have completed. If you follow a Search Fund Model 60% of Entrepreneurs who adhere to the model of a Search Fund are likely to be successful.
Thank you for stopping by and reading. Please do drop us your email address for new Blog posts as I write them. Because I will be writing a ton more about Search Funds as my own Business model evolves.
Please feel free to share on Linkedin or any groups. And If I missed something in writing this? Please feel free to send me a email and I will consider your information you provide to add to this guide.
Happy Hunting to all Entrepreneurs using a Search Fund model.
JS