Advice needed: self-funded vs. bringing on an investor

April 10, 2026

by a searcher from California State University, Fullerton - Steven G. Mihaylo College of Business and Economics in Yorba Linda, CA, USA

I’ve been actively searching for about 6 months now and could use some perspective from people further along. Background-wise, I come from financial services + sales/bizdev/marketing leadership. A lot of my experience is around revenue generation, client relationships, and growth. I also have a pretty strong network on the public markets side (family offices, hedge funds, investment banks, etc.), but I’m not sure how relevant that actually is in this world. I’m based in Yorba Linda and focused on SoCal (OC, LA, Riverside, SB, parts of SD). Mainly looking at manufacturing/fabrication, but generally open to blue-collar businesses that don’t require contractor licensing. All my lifelong hobbies and interests are "blue-collar-friendly" (powersports, watercraft, offroading, etc.), so it feels like a natural transition. So far I’ve reviewed hundreds of deals, gone through ~40 CIMs, and had real conversations on ~10. Passed on a handful after digging in—mostly due to heavy owner involvement, questionable add-backs, very small teams, or equipment/operational issues. My current range has been driven by my own capital: ~$200–350k SDE ~$600k–$1M ask < $120k liquid from me Open to SBA / seller financing What I keep running into is that a lot of these smaller deals feel like I’m buying a job, even if they look fine on paper. Trying to avoid stepping into something where I’m the entire operation from day one. Ideally I’m looking for something with real SDE (not add-back magic), some operational depth, long track record, and obvious room to improve sales/marketing without having to overhaul everything. However, lately I’ve been thinking about bringing on an investor and moving up-market a bit—maybe targeting ~$750k–$1.5M SDE / ~$2–3.5M EV—where the businesses seem a bit more built out. My hesitation isn’t really giving up equity, it’s more that I don’t fully understand how those partnerships actually work in practice: how people structure these deals what roles look like post-close how control typically works whether it actually leads to better outcomes or just more complexity For those who’ve gone either route— would you do it the same way again? Feel free to message me or email me at redacted Appreciate any thoughts.

Reply by a searcher
from Massachusetts Institute of Technology in Captain Cook, HI, USA

I’ve gone through the process of raising money for 2 self funded deals now (although I didn’t actually close on either of them I did have many investor conversations and interest). A typical SMB investor will want ~2x step up (meaning if they invest for example $100k in a $2m deal they own $200k worth of the business so 10%). They also look for a purchase multiple under 5x. Typically you’ll retain 60-80% ownership of the business which means you retain control. There are typically terms that prevent you from selling if investors will lose money and other similar ones that make sense, but practically speaking you still control the business and even better you have a built in advisory board via your investors. It wasn’t hard to find investors either because there’s a list of 270 or so SMB investors and they are all looking for a good deal (search for Sam Rosatis SMB investor list here in search funder) I definitely recommend increasing your buy box and raising money for it if that’s what you need to do because you’re right that buying in the smaller range is buying a job. Feel free to DM me if you want to chat

Reply by a professional
in Brooklyn, NY, USA

Stephen, from what we see SBA covenants can be really constraining. To feel comfortable with, say, 1.5x debt service ratio, you are probably looking into a 3.5x multiple for a standard 10% downpayment. This level is low for a business with truly recurring revenue which can be priced as high as 5+x. Therefore, if you must pay a higher multiple and the seller is not willing to underwrite a note, external investment becomes important. Hope it's helpful.

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