I am looking to raise a fund but also have the option of raising capital through my family business (owned by multiple share shareholders across an extended family). We don't have a family office setup, however I could potentially raise 50 to 100% of the search capital through the family business by making a strong proposal. Has anyone taken this approach and can you provide advice on how to approach this, pros/cons of family investment vs. outside investors, etc?
Thanks,
Jekin
Search fund with family office
by a searcher from INSEAD
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Hence, as fundraising wont be a problem, try to find some external investors who could add value to your SF, but also willing to play in a situation that there is a Family Office behind.
Cheers
The pros of raising internal money: flexibility around the fund focus and the deal management along with potentially more favorable terms for you. It will probably be also more patient capital. You might also be able to buy-out the family investors in a more efficient and friendlier manner down the line if you want to run your company as the sole owner for the long-term
Cons: you might not have the benefit of a sophisticated board comprised of external investors. Your deal sourcing and vetting might also be less sophisticated. Lastly, if things don't go well, then the relationships with friends and family could be strained.
Best of luck.