The R E L A Y Blog
For the ones with talent and drive, Search Funds put entrepreneurs at the helm of a small but profitable vessel, and open up the entire open skies of commerce for exploration.
The investment thesis undergirding Search Funds is that a stable and profitable company can be grown by a driven, ambitious, and well-prepared MBA graduate.
In the 20+ years since Search Funds were invented at Stanford Business School, they have become one of the fastest-growing niches in the alternative asset management space.
Search Funds have returned an average 34-37% IRR for several reasons over the course of 30 years. One of the most overlooked is the superior deal-sourcing Searchers are motivated to pursue.
The ETA sector (i.e., Search Funds) will continue to grow as long as it continues to deliver the outsized returns that have made it one of the most attractive investment areas in recent times.
Search acquisitions are being made internationally. As is the case in North America, Search Funds are providing investors & entrepreneurs in international regions a beneficial alternative to PE and VC.
2015 (latest year data is available) was a record year in terms of numbers of SFs raised & companies acquired. Likely the next several years will continue to see an increase in activity.
VIA TECHCRUNCH DISRUPT– JetBlue Chairman is a proponent of the SF model for startups & entrepreneurs, and as a vehicle for groups of investors to financially back young entrepreneurs.
VIA FORTUNE.COM– Search Funds are finding fertile ground in Europe, with its aging generation of baby boomer business owners, family successor shortages, and aversion to traditional PE buyers.
VIA BUSINESSWIRE– Since 2015 HBS MBA VC & PE Conferences are including Search Funds in their panel discussions, a reflection of the asset class’ developing trend as an alternative investment.
Search funds are a great asset class. They capitalize on a micro-buyout approach that offer investors and entrepreneurs a superior risk-and-returns profile than the traditional PE and VC market.
For entrepreneurs who are motivated to build and manage their own business, but who may lack an idea or the desire to start a company, acquiring a business via SF model is an excellent option.
The Search Fund model has begun to become more established. Several private equity firms have begun investing in search funds…providing greater support for & credibility to new Search acquisitions.