If you’re a self-funded search investor, you might be interested in participating in an initiative that a few dozen of us other self-funded investors are working on.
By way of background, I manage Main Street Capital Network, a group of over 100 SMB equity investors (individuals, family offices, and funds). We review pitches from a couple of searchers or independent sponsors each month.
A recent initiative of our group has been to work on a standard set of terms that self-funded deals can work off of (much like how angel investing has the SAFE note, which is a free, publicly available legal document for structuring seed investments that founders and investors both work off because they agree it's fair).
The capital raising process would be much simpler if there were a free, fair, and publicly available term sheet for self-funded preferred equity (that investors and searchers both thought was fair). Investors wouldn't have to worry whether key economic terms (preferred return, waterfall, etc.) and governance terms (limits on related-party transactions, tag-along rights, etc.) would be included in the deal. The focus is on a structure with blanks as opposed to actual numbers (e.g., "preferred return of [ ]%" as opposed to "preferred return of 10%").
We want to involve as many investors (and eventually searchers) as possible to produce a document that is considered truly fair and comprehensive.
Current Draft
The current draft of our work is in a Google Doc here: Term Sheet: Self-Funded Search Preferred Equity.
Next Steps
If you’d like to be kept in the loop on this process, please DM me your email or contact me at We want as much investor input as possible!
About Us
At Main Street Capital Network, we review pitches from a couple of searchers or independent sponsors each month. If you’re an accredited investor interested in joining us to look at deals, please fill out this investor form. Also, if you have any questions about the group, please feel free to DM me here or email me at
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