I, SEARCHER – SELLING SEARCH TO SCEPTICS (BLOG 1 OF 4)
If you are passionate about becoming an acquisition entrepreneur, committed to the search fund model, and live in a country where no one has heard about EtA, how do you sell your value proposition? How do you position yourself and the model in order to accelerate your process of getting a fully committed Search Fund?
We recently met with 19 members of the growing Aussie Search Fund Community to discuss progress, and a key theme that arose in conversation was that of selling the value proposition of a searcher to potential investors. A new concept in a new market makes the value it brings somewhat harder to sell. But as we know (but must be reminded of), the value doesn’t actually lie in the model or investment class itself, but rather in the searcher. For investors used to ‘deals,’ selling a value proposition around a person is a paradigm shift, especially when the concept of a Search Fund is new and unknown.
So, we asked four Aussie Searchers, two who are currently or have previously searched, and two who are in the process of raising a traditional fund, to share their experiences of how they have/are selling their value proposition to investors. This series of blogs is co-authored with Nikita Gossain, Alex Simmons, Greg Green and Nick Bamford, and as always, we are grateful for their commitment to the community.
Out of that conversation five key themes were identified, and we’ve summarised them in four short of blogs over the coming weeks, as follows:
1. Sell YOU not the Model Part 1: Be clear on what you are selling and your messaging
2. Sell YOU not the Model Part 2: Searchers bring a winning proposition to both investors and sellers. Understanding the value that you bring to each can help you to articulate a very compelling and unique story.
3. Finding the ‘right’ investors: The value proposition of a Searcher involves a balance between commercial and cultural considerations – balance between the ‘hard’ and the ‘soft.’
4. You’re buying too!: What’s your investor ‘mix’? Being clear on the characteristics of your ideal investors can accelerate your process. Your search career begins when you engage with potential investors, well before your search for a business commences. What are Searchers looking for in their investors?
And so, to our first theme:
Sell YOU not the Model (Part 1).
The Search Fund model is super cool. It is why we are all attracted to it and become champions of it. So, you can be forgiven for enthusiastically selling its benefits to a potential investor. But if you begin with that conversation, then chances are, you are putting the cart before the horse.
Selling the Search Fund concept will always be tougher than selling YOU.
You also fall into the trap of selling (to paraphrase Simon Sinek) the How vs. selling your Value (the Why). Putting How first is fraught with issues because potential investors can easily find fault with the features of the model. Much harder though, to find fault in an enthusiastic, bright, high-energy, dedicated entrepreneurially minded person who is driven by their Why.
How are current and intending Searchers approaching this?
“Investors not familiar with EtA largely have an appetite that goes along the lines of ‘yeah, we'd love to invest in something tangible when you bring that to us, so let's talk then.’ So, getting past that first hurdle means talking through how it makes sense to invest in someone now, who is completely dedicated to this process.
“A business succeeds or fails depending on the operator who's running the business, and you're better off to develop that relationship early on, at a low risk, and low cost, as opposed to just evaluating the opportunity based on an initial conversation or a series of conversations with a potential manager and the merits of the business itself. You can sell the benefit of using this time (searching phase) as a methodology for the investor to get to know the Searcher. It’s a low cost methodology to get to know them. It’s a diligence process on an individual.”
“It doesn't really make sense in a market like Australia, which is very new to Search, to try to sell the model. You are then essentially entering into a derivative problem that just becomes harder and harder to solve.
Given the Covid19 world we find ourselves in, the state of the market etc, “I just don't think that selling the model first is going to be the thing that gets you in front of people and gets them willing to bite.”
“The primary thing is that you are forming a relationship with investors, right? So what I tried to do was to focus on meeting with investors, selling me to them because they're always on the lookout for people who are well trained, bright, well-educated and want to go and do it. And once they are sold on me, you can sell the model, almost as a given – ‘Oh by the way, this is the model, and it's been tried, tested and finessed in the North American and European markets for over 3 decades,’ rather than the other way around.”
Sell your Why first. The How comes later.
YOU are the thoroughbred! Put the thoroughbred before the chariot.
Keen to learn more about Search Funds and Entrepreneurship through Acquisition in Australia? Contact us at Resource Page too for the latest global research and information on Search Funds.