Raising a small friends & family fund to cover deal costs?

August 21, 2025

by a searcher from University of Maryland at College Park in Austin, TX, USA

I am looking to raise a small fund from friends and family (likely $50-100k) simply to cover deal costs, a la traditional searchfund but much smaller and (ideally) without many of the bells and whistles. I'm wondering what tips, advice, resources may be out there for me to weigh here. What can I do differently (read: less costly) than a traditional searchfund, considering the nature, size, and source? I'm sure I'm not the first to go down this path - I'd love to hear from anyone else who is approaching their search this way.

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Reply by a professional
from Villanova University in West Chester, PA, USA

Hi ^redacted‌! It’s much easier and less expensive to structure it as a loan that mimics equity than to raise capital via issuing equity. Dean Street Law offers legal guides and legal services to assist with this. Click here to check out our guides and services! https://www.deanstreetlaw.com/links

Reply by an investor
from Harvard University in Dallas, TX, USA

Liz. As with all answers it depends a bit. Firstly if you are planning on using debt (sba loans etc) then they'll require you to do certain things. Due diligence is most often primarily their requirement. I raised a fund in 2009 and my legal fees and deal costs on the initial deal were under $50k. It was a smaller business and performing badly but we had a great plan to turn it around. Due diligence is way less important when the seller has a significant stake in the outcome (more than half their money coming that way). That also applies to legal contracts. Their are boiler plate legals that you can adapt. Again if the risk is shared with the seller. So interests are aligned. If you're going to go "light" on those parts of the process it would be really risky to have any personal guarantees. Like the old adage, ask a barber if you need a haircut.....you'll find plentiful service providers who will give you endless examples, which will all be true, of why diligence and legals are important. Your question is how to go cheap and therefore lightweight. Essentially do a bunch of it yourself, don't use debt (or if you do, don't personally guarantee it and negotiate as to what is essential) and then do a deal where the seller is heavily incentivized to be truthful and where its a real partnership. I will say that I bought from a 79 year old and 4 years later was the main speaker at his funeral and we had a great relationship where he taught me a lot and (in his words) he got a lot of fun and a new lease of life. So it is possible.

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