Are Investors In The Pe/vc World A Right Fit For A Searcher?

ARE INVESTORS IN THE PE/VC WORLD A RIGHT FIT FOR A SEARCHER?

I mentioned to some friends that I am looking for referrals to potential investors for my self-funded search. As a result, a few of them offered to intro me to investors who don't typically invest in search funds, such as tech VCs, and Private Equity firms. 

My thinking was that these guys are not normally looking at search fund types of investments, but since they are people with capital, there is no harm talking to them, and you might get the odd eccentric VC who is also interested in the search fund model. 

My question: Has anybody got suggestions on whether your investor base should be coming exclusively from the search fund world? Any thoughts about building an investor consortium in a deliberate manner? I suspect it might not be good long term to accept any cash that comes your way. Look forward to your opinions!

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admin Massachusetts Institute of Technology - MIT Sloan School of Management Taylor University Stanford University - Graduate School of Business - 10/08/2020

^[redacted]‌ - In addition to the comments you receive here, you can find investors that match your search criteria under Menu / Searcher Tools / MySearchfund. Here is the direct link: https://www.searchfunder.com/searchfund/mysearchfund

like reply | 1 like

searcher - 10/08/2020

Dear Chin Tan,
there are few who are principals at PE vehicles and investing into search funds regularly, but to be honest, from my network many of PE partners just want to be 100% focus on their PE funds and be all-in. Also one of the guy I know from mega fund (e.g. Blackstone, KKR, TPG,..) told me about restriction in his contract regardless he is at very the top of the structure. Needless to say, once they are smaller and you're planning to compete with them for deals, they are not super happy about that and therefore not ready to join the cap table. I hope it helps.

I would definitely make what connections you can. I'm part of a group with >50 PE lenders and they all have different interests, requirements and options. Even if they don't engage up front in the search funding they can be invaluable for improving the financial position of your acquisitions.

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searcher HEC School of Management, Paris University of Sheffield - 10/08/2020

Thanks for your advice Michael. 50 investors in your consortium? that must be a big equity raise!

searcher Yale University - 10/08/2020

A lot of the bigger search fund investors are also/formerly PE and VC partners (Housatonic, Trilogy, Peterson, the Burrs and Egans, among many others). I think a lot of PE and VC partners would be interested in a search fund deal for their PAs to diversify their exposure outside their own funds. The only issue I had pitching to people outside the search world is the actual funding of the search phase, which is on paper a very expensive option. But if you're self-funded and have connections in PE and VC, and you have a fantastic deal, I think they'd take a look.

like reply | 2 likes

Interesting question. Look forward to replies that come in. Thanks Chin Thanks Alyssa

ARE INVESTORS IN THE PE/VC WORLD A RIGHT FIT FOR A SEARCHER?

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