Scaling Search Funds: Could it be a long-term opportunity? (Link to current strategic plan)

January 29, 2025

by a searcher from INSEAD in 77300 Fontainebleau, France

Hi everyone,

I wanted to share my strategic plan for Fogo Capital, my search fund.

--- Link to the strategic plan ---

My search fund model, how I see it, would be more than just a one-off acquisition, it would be a long-term partnership with investors. While I’m still exploring whether a search fund is the right path for me (given I have a job lined up post-MBA), I’m actively evaluating funding opportunities in the Middle East (where I currently live) and will soon move to Europe to explore that market.

Key aspects of my approach:

Search Fund as an Investment Product – Instead of positioning SFs as a niche entrepreneurial opportunity, I see them as an alternative investment class delivering high risk-adjusted returns###-###-#### % IRR) while allowing investors to phase their risk exposure. I have worked in Billion dollar transactions before, my previous employer was a leader in Latam, therefore there is a de-risking investment factor as well

Global Fundraising Strategy – Unlike traditional SFs that rely mostly on U.S.-based investors, I aim to diversify across North America, Europe, and the Middle East, engaging different investor profiles:

Igniters (Angels, Friends & Family) for initial backing

Builders (Family Offices, Specialized SF Investors) for structured support

Amplifiers (PE funds, Institutional Investors) for post-acquisition scaling

Beyond One Deal – Most search funds focus on a single acquisition, but I’m evaluating alternative structures such as holding companies or roll-ups to create a more scalable investment vehicle.

Investor-Centric Approach – A key part of my plan is building long-term relationships instead of transactional fundraising. This means aligning governance, incentives, and communication with investor expectations, from small backers to institutional players.

I’d love to hear insights and reactions:

Have you seen successful multi-deal SFs or hybrid models in action?

What were your biggest challenges in securing funding outside the traditional U.S. SF market?

For investors here—what makes an SF pitch stand out to you?

Reply by a searcher
from Harvard University in Toronto, ON, Canada

What you are saying is not Searchfund model. It is a Fund model. If you are a Searcher then you go for searchfund. If you are a fund operator - then Fund is your bet. Searchfund is a space where investors have some cash to invest but do not have time to manage the business, so they hire searchers to manage the businesses as its CEO, a paid employee, with a modest exit gain for period of 5-10 years. In this format investors ensure (in the agreement) that they do not allow searchers to acquire multiple businesses to dilute capital/operations capability/dilute equity of these investors. You may at the decision of investors, follow to acquire 1-2 add-ons but statistically below 10% of searchfund model is known to do that. Records can be found on google. If you are a Fund then it is a portfolio co, and you are a fund manager not a searcher.

Reply by a searcher
from INSEAD in 77300 Fontainebleau, France

Hola/Hello/Bonjour Jason,

Thank you for your comment! I’ve also come across the fund-of-funds model in a few places, there are even some emerging players in Mexico. I completely with your point about HoldCo.

My interest is also in the HoldCo approach or transitioning a successful search fund into a LMM/MM PE firm by leveraging both the network and operational expertise. I see a huge opportunity here, especially in Latam where even PE is still a not so well developed concept.

That said, as Hailey Hu mentioned in the comments, I’m struggling to figure out how to package this in a way that appeals to institutional investors. I am seeing that they need to write larger checks for it to make sense in its diversification strategy.

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