Title: From Dreaming of CEO to Buying a Company: The Rise of Search Funds
Edward Silva, a former chief executive and Stanford Graduate School of Business student, had dreams of starting his own company. However, a classmate introduced him to the concept of search funds, where entrepreneurs raise money to buy and run existing companies. Intrigued by the idea, Mr. Silva raised over $30 million and purchased MásLabor, a Virginia consulting firm specializing in employment visas.
Search funds, which started as an experiment four decades ago, have gained popularity in recent years. Nearly $800 million was invested in search funds across 2020 and 2021, with the number of funds started growing five times in the last decade. The average internal rate of return for search fund investments has been 35 percent, outperforming private equity funds.
Entrepreneurs like Mr. Silva and Kelsey Holland, a recent Harvard Business School graduate, are turning to search funds as a way to achieve their goal of becoming chief executives. Ms. Holland, who raised half a million dollars to acquire a health care company, acknowledges the growing competition in the search fund industry but remains confident in her ability to find the right company.
As search funds continue to attract investors and entrepreneurs, the industry is seeing a shift towards acquisition-based growth strategies. Entrepreneurs are looking to buy multiple companies and merge them together to build successful businesses. Despite the challenges and competition, individuals like Mr. Silva and Ms. Holland are determined to make their mark in the world of search funds.
In a competitive market where traditional paths to success may be uncertain, search funds offer a unique opportunity for ambitious individuals to pursue their dreams of entrepreneurship and leadership. With creativity, determination, and a strategic approach, entrepreneurs like Mr. Silva and Ms. Holland are carving out their own paths to success in the business world.
