I have put together a framework for what has ended up being a more compelling pitch on our Searchfund platform than I expected. MY background is a theology school dropout, doing commercial real estate and our firm has morphed over the years to doing a lot of national site selection, labor valuation, financial incentives and running a rural economic development platform.
What you don't see in there is anything around finance or structuring an investment "ask". What are some line items or costs you may have overlooked or didn't account for enough when structuring your Searchfund? Was it around due diligence? marketing? salaries for key players?
I am also a Midwesterner so I tend to be conservative and somewhat reserved when it comes to asking for money, but I believe strongly in what we are building and have the concept validated by many who have been in and around PE for decades so I want to make sure I account for everything we will need and make sure we get the investment we need to start strong.
Structuring the Fund "Ask" in Searchfund
by a searcher from Regent College
More on Searchfunder
Searchfunder is an online community and toolkit for searchfunds. Over 80% of those involved in searchfunds maintain a Searchfunder.com account to help them network, problem solve challenges, and keep up with the industry.
We maintain partnerships with database providers that make searching more effective, efficient and affordable along with features that help searchers find deals and investors and vice versa.
We maintain partnerships with database providers that make searching more effective, efficient and affordable along with features that help searchers find deals and investors and vice versa.
High level, there are two types of search funds:
1) Self-funded search where searcher funds own living expenses and search/deal costs out of pocket
2) Traditional search where a search investment firm typically pays for search/deal cost and may also provide a modest salary during search to cover living expenses
If you are going self-funded, a search on the forums here will yield plenty of information on typical search/deal costs to inform your budget. Typically, you won't be able to raise money from investors in advance for a general purpose 'fund'. The in investment will be tied to a specific deal and only committed after you have incurred some search/deal expenses..
If you are going traditional, you won't be paying the search/deal costs and the search investment firm should have a good idea how much it will cost based on their experience.