Articulating Search Fund Model to Investors

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by a searcher from Virginia Polytechnic Institute and State University (Virginia Tech)
in Bengaluru, Karnataka, India

9yrs ago

Articulating Search Fund Model to Investors

I was asked this question by an Investor who has a Non-Search Fund background. “Why should I not invest directly in the acquired entity against equity rather than invest through Search fund entity?". Curious if anyone has faced similar line of questioning? Also, What are some of the tested ways to convince on the search fund model to investors who do not have exposure and experience in search fund investing?

Any insights will be useful.

Best,

Arnov

14 Likes

291 Views

reply by a searcher 9yrs ago
from Cornell University in Sudbury, MA, USA

The few times I have tried to explain the search fund model to non-search fund investors, i got similar questions. I tried to explain that this was a lower risk approach. Most told me that they sort of get the model and that they were not interested. They suggested that to talk to investors in the search fund community as they would be more open to it.

reply by a searcher 9yrs ago
from The University of Chicago in 85 Broad St, New York, NY 10004, USA

Completely agree with Matt. It's tough enough to sell the idea of a SF to a non-SF investor. To get them to invest in the SF entity is even harder. I would back up your pitch with the data showing historical returns for those investing in SF entity vs acquired entity.