I'm interested in investing in SMBs, either directly as part of searcher's fundraising or through a search fund.
For those of you who have been active as investors in the search space, I was curious to learn about a few things:
1) How did you come across the opportunity to invest? By networking with searchers?
2) What's the typical size of investments you've made? Or what's typically the minimum requested by searchers? Obviously depends on the size/nature of the deal, but wanted to get a sense of range. $50K? $100K?
3) If you've made a few investments, did you set up a LLC or other entity structure for tax purposes? (so you can run investment related expenses through them?)
4) For those of you who've invested in Canadian deals from the US, did it present additional complexities/challenges beyond the obvious FX risk? (e.g., tax complexities, difficulty in moving the money, etc).
Thanks!
For those of you who have been active as investors in the search space...
by an investor from Columbia University - Columbia Business School
More on Searchfunder
Searchfunder is an online community and toolkit for searchfunds. Over 80% of those involved in searchfunds maintain a Searchfunder.com account to help them network, problem solve challenges, and keep up with the industry.
We maintain partnerships with database providers that make searching more effective, efficient and affordable along with features that help searchers find deals and investors and vice versa.
We maintain partnerships with database providers that make searching more effective, efficient and affordable along with features that help searchers find deals and investors and vice versa.
After 3 years of searching (and 2 near catches), I found an opportunity that aligns well with my criteria. Quick snapshot: • Revenue: $1. 4M • SDE: $350K • Purchase Price: $1.1M • Strong Financials (with MSA’s in place and annual recurring revenues) • Seasoned Team of professionals in place • Industry: Well Drilling and Pump Servicing Co; high barrier to entry industry • 3-months backlog of sales booked year round. I’m thinking of targeting a non-SBA Commercial loan; 50-60%+ LTV, contributing $220K of my own capital, and seeking investor funds to bridge the gap with a preferred return until principal & interest are fully repaid. I am not opposed to PG's and can offer the Investor first rights to any further growth capital requirements. What I bring: • 14 years of industry & leadership experience • A trusted team of subject matter experts • A robust reinvestment-first strategy: I do not need to draw a salary from this acquisition—100% of first-year profits (after Debt Service & investor paydown) will go straight back toward scaling the business.
• Solid growth plan to bring sellers 'spun-off services' back to the same $5 mil revenue they were at 7 years ago. Would this be something oof interest to you? This is my first time pitching the opportunity, so I appreciate your time. I’m currently working on a more formal teaser, but I’d love to chat if this aligns with your investment focus. Feel free to ping me at --@----.com if you’d like to discuss further. Appreciate it!