"The Traditional Search Fund Model is Broken"

investor profile

March 17, 2022

by an investor from Harvard University - Harvard Business School in Houston Heights, Houston, TX 77008, USA

"The traditional search fund model is broken" Yep - we're making big claims over here at SIG. I was honored to be hosted by Gavin Jocius on his podcast, Wisdom.MBA, to talk about SIG's innovative model (searchinvestgroup.com).

Apple Podcasts: https://lnkd.in/gfSar_f2

Spotify: https://lnkd.in/gSn-nnjf


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Reply by an investor
from Dartmouth College in 80 S Main St, Hanover, NH 03755, USA
I'd love to hear the debate ("search fund dance off"), although the question "is traditional search broken" or "which is better, traditional vs. self-funded" despite being provocative constructs - aren't really that helpful for anything but getting attention. These questions represent choices for searchers and investors in a marketplace - which is and will continue to form and evolve. These and many other iterations of business models will thrive and be innovated for years to come. You might as well throw in "single-sponsored search" or "accelerator search" as a third category, and there are many others ('traditional' independent sponsor being another paradigm that actually means a lot of different things - happy to dance off on that topic personally given our history of investing with independent sponsors).

Is it fair to assert that the contrast of the two models are primarily from differing allocation of various risks as well as a broader segmentation of appetites from investors (again, different allocation of risk and return) in a maturing (thus segmenting) market. No two deals or partnerships are identical (even in the well honed "traditional search" universe). There is lots of room in the market for all these models to thrive - forums like this one (and Robert and Greg's forthcoming dance-off) should be focused on shining light on the misunderstood nuances of the models so that market participants can make more informed choices.
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Reply by an investor
from Harvard University in San Francisco, CA, USA
^redacted‌ - you raise some interesting points, but I don’t think you accurately portrayed traditional search. I understand that you’re trying to advocate for the self-funded path, but I think your argument would be more compelling if it were more accurate and measured.

Your description of traditional searchers as nothing more than “employees” was particularly off base and frankly insulting to the wonderful entrepreneurs that go down the traditional search fund path. I would encourage you to educate yourself a bit more about the experience of traditional searchers before making that type of claim.

I also find it interesting that traditional search is accelerating in popularity despite being “broken.” In fact, we’re seeing more and more traditional searchers go down the traditional search path for a second time. Are these amazing entrepreneurs simply naive?

Plenty more to say about your podcast. My point of view is that all forms of ETA are awesome. I think it’s healthy for the broader ETA community to debate the various models, but I do think there’s a way to discuss the different models in a more informed and respectful manner,
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