Raising a Traditional Fund vs. Extending my Self-Funded Search
February 13, 2025
by a searcher from Loyola Marymount University - College of Business Administration in Waterford, CT, USA
Since starting my self-funded search for music and audio product companies, I’ve been balancing search efforts with part-time consulting work to keep income coming in. Starting around October of 2024 and continuing to-date, consulting work has been harder to come by, and I feel I now have to make a decision:
1. Invest significantly more time prospecting for consulting work to keep self-funding my search, at the cost of reducing my search efforts
2. Raise a search fund to extend my runway and enable myself to truly search full-time
I’ve raised capital before and have maintained relationships with those prior investors, keeping them abreast of what I'm working on, as well as a other individuals who may be interested in my future deals. That said, I have no committed capital today as it hasn't felt appropriate to ask people for money when I don't have a deal to discuss. I'm building a rollup, targeting small companies that make their products in the USA, with long-term durable demand and lifecycles, at least some being manufacturing companies. I have an IOI out to a prospective first acquisition, but even in the best-case scenario, it would be months before closing. That leaves me facing this decision now. I’d love to hear from those who have raised a search fund, and especially anyone who transitioned from self-funded to traditional search, or gave serious thought to it and didn't follow through. What were the biggest trade-offs? What did you wish you knew before making the switch? Thanks!
1. Invest significantly more time prospecting for consulting work to keep self-funding my search, at the cost of reducing my search efforts
2. Raise a search fund to extend my runway and enable myself to truly search full-time
I’ve raised capital before and have maintained relationships with those prior investors, keeping them abreast of what I'm working on, as well as a other individuals who may be interested in my future deals. That said, I have no committed capital today as it hasn't felt appropriate to ask people for money when I don't have a deal to discuss. I'm building a rollup, targeting small companies that make their products in the USA, with long-term durable demand and lifecycles, at least some being manufacturing companies. I have an IOI out to a prospective first acquisition, but even in the best-case scenario, it would be months before closing. That leaves me facing this decision now. I’d love to hear from those who have raised a search fund, and especially anyone who transitioned from self-funded to traditional search, or gave serious thought to it and didn't follow through. What were the biggest trade-offs? What did you wish you knew before making the switch? Thanks!
from University of North Texas in San Antonio, TX, USA
Hey, I’ve done this right, I’ve done it wrong, and I’ve helped others through it. But I’ll say upfront—I haven’t done a traditional search fund deal myself, so take this for what it’s worth.
That said, don’t quit your day job until you’ve replaced that income. I know some folks get lucky, but cash is king. If you can do this part-time, you can do it full-time. Running out of money forces bad decisions, and I don’t want that for you.
If I gave you the ‘perfect plan’ that worked for me, there’s no guarantee it would work for you. Every situation is different. But what I do know is that keeping some income coming in will force you to lead through others and delegate—not abdicate. That’s a skill you’ll need whether you stay self-funded or raise capital.
Apologies for the rant, but I’ve been there, done that, and just want to help. Hey, I could be totally wrong—but I’d rather you keep control of your options than be forced into a tough spot.
Curious—if consulting wasn’t drying up, would you still be thinking about raising a fund? Or is this just a way to buy yourself more time? No need to answer, but to yourself.
Wish you only the best!
from University of Southern California in Los Angeles, CA, USA
Ownership & Control: With a self-funded search, you retain 100% of the business. You make all decisions, and once you acquire a company, you don’t have to answer to investors. In a traditional search, you give up a significant portion of equity (often 25-40%) to investors, meaning less control and more oversight on major decisions.
Financing & Deal Size: Self-funded searchers typically rely on SBA loans, seller financing, and personal capital, which limits deal size but allows full ownership. Traditional searchers can pursue larger acquisitions with investor backing, but they also need investor approval for deal structure and financing.
Runway & Risk: Traditional search provides a salary during the search phase, which reduces financial pressure but comes with the expectation of securing investor-friendly deals. A self-funded search requires you to cover your own expenses, making the early phase more challenging, but it gives you full flexibility to pursue the best deal for yourself.
Long-Term Outcomes: if I had to guess, 10-15 years down the road, most traditional search fund operators might wish they had owned 100% of their businesses, since they are the main operators and their work was what led to all the value being created but they receive a percentage not all the upside. If I was you, I’d focus on getting this planned acquisition completed and own all of it.