Investor acquistion strategy in new markets

September 11, 2022

by a searcher from University of Oxford in Johannesburg, South Africa

Hi everyone

For people raising search funds in new markets (I'm considering lauching in South Africa), did you prioritise international investors who already had experience investing in search funds, or did you try to educate local investors on the search opportunity? How did your engagements go with the different types of investors, and what trends did you notice?

Thanks for the help!

Regards

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Reply by a searcher
from University of Otago in Christchurch, New Zealand

Hi Modi, I recently raised the first traditional search fund in New Zealand and I understand completely what you are asking! The differences between raising from international investors and raising from local investors was a key part of my raise experience. I'm happy to chat through my journey any time - feel free to send me a message and we can jump on a video call.

Reply by an investor
from Harvard University in Vancouver, BC, Canada

Hey Modi - frustratingly, this can be a bit of a Catch-22, where internationals will like to see validation of the local opportunity from reputable local investors; but locals will want to see reputable international Search Fund investors validate that the model will work in their country and that the Searcher is good vs more global comps before committing (of course, neither group ever really knows at the start, in a new country!). In this sense, you can be stuck, as you really should aim to have both (see here for broader thoughts on constructing a Search Fund cap table: https://www.linkedin.com/pulse/reflections-constructing-search-fund-cap-table-rob-leblanc/)

It makes sense to engage with both groups, and seek at least soft commitments, conditional on you landing good investors from the opposite group. This can help you build some credibility and momentum in your raise.

Happy to discuss further if helpful. redacted other SA-based Searchers tagged below >>
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