CASE STUDY

Making The Switch From Venture Capital To Search Funds

MALCOLM COLLINS

CEO, Travelmax

POSTED OCTOBER 2017

Image via Travelmax.com.

Relay Investments-backed searchers Malcolm and Simone Collins of Family Collins Ventures have taken on the hyper-competitive Travel & Leisure marketplace with their purchase of Travelmax. The Relay-backed entity is an international chain of travel companies that manages corporate travel for businesses and organizations, sells travel on a wholesale basis to travel agencies, and offers travel booking services and tour packages to leisure customers. Relay’s Sandro Mina sits on the company’s Board.

A little over a year ago I was the Director of Strategy at the leading venture capital firm in South Korea’s early stage space and was in the midst of a world tour looking to raise our next fund. During this world tour, I took “fun meetings” in which I would sit down with people working on investment models with which I was less familiar.

When I hit Boston I reached out to Relay Investments after hearing about them as a leader in search fund investing at Stanford Business School while getting my MBA. I sat down at a burger restaurant with Relay’s Co-Founding Managing Director Sandro Mina under their offices in the landmark Prudential Center. In this meeting Sandro opened my eyes to the potential of search funds as a post-MBA career path.

While I was raising money for my Korean investment firm I had received interest from a number of high networth individuals in investing in a US based investment fund that I would run. This would give me the ability to work with my wife again, with whom I had previously launched a start up, and who was at the time working for a VC firm in the UK while getting her graduate degree at Cambridge. We assumed that this fund would be a venture capital fund since at the time we were only passingly familiar with search funds from my case studies at the GSB.

All that glitters … is not Venture Capital

The VC lifestyle was losing its luster to the both of us. Despite the prestige often associated with the VC lifestyle at business school, we ultimately found the profession offered very little room for personal actualization, leadership, or intellectually engaging work.

If we raised a VC together we would be stuck passively nudging company owners (as one of a dozen investors) in a direction to fulfill our vision for their company, (the harder we pushed the “worse” a reputation our fund would get). Instead of leadership, we would be relegated to a life of making semi-informed bets based on constantly shifting models and begging for money.

Making the search fund career choice

On the other hand, a search fund would put our success and future in our own hands. A search firm gave us the potential to have our success based on our leadership and our ability to execute on a vision for a company. We could come up with our own hypothesis for how we could grow a small company and attempt to execute on those plans ourselves. Better yet, we would only have two short periods of begging for money, each only lasting a couple months (in the VC world a fundraise can easily take eight months and there is always another on the horizon).

I am endlessly grateful that I reached out to Relay Investments and had that meeting with Sandro Mina. I can’t imagine feeling more fulfilled than I do now, managing and growing an international chain of travel companies with my wife. I am in a position where my failures and success are my own to own, which I was not in the VC world.

“The VC lifestyle was losing its luster to the both of us. Despite [its] prestige … we ultimately found the profession offered very little room for personal actualization, leadership, or intellectually engaging work.”

Key is a search fund without a controlling investor

I am also uniquely grateful that Relay was the first of the search fund community we interacted with. Their focus on search funds without a large controlling investor put me on a path to raise the type of search fund that allows for independent decision making and creativity. Relay made raising a fund much easier by introducing us to other investors who prefer this model, reducing the periods we had to spend begging for money.

Even better, when it came time to close our purchase of Travelmax, Relay sent one of their VPs, Nicolás Lulli, to all the company’s international locations.  He managed detailed reporting to all our investors. Without his due diligence, and Sandro Mina’s taking an early board seat, closing as complex an acquisition as Travelmax would have been impossible.

Conclusion

If you are even vaguely interested by the concept of a search fund, especially a search fund not controlled by one large investor, I recommend you reach out to Relay Investments and Sandro Mina.

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