"Funding Secured"

Happy to share that my search fund is now officially backed, though not in the way I anticipated. I’ll be pursuing the path with a single sponsor as opposed to a group of 8-10 investors. This group is familiar with my prior work and share similar ideas about long term value creation in the search space.

It feels great, but it also feels like a hard reset. The fundraising is over, but the work is just beginning.

When I started this process, I assumed the raise would come together pretty quickly. Maybe it was overconfidence. Maybe naivety.

I’d never raised a search fund before, but I wasn’t worried because I felt I had all the key ingredients:

I knew my story, and I knew how to tell it. I thought anyone who understands this space will see it.

But they didn’t.

Or at least, not enough of them.

Prior to accepting the single sponsor offer, I had multiple parties interested in investing in my search however were looking for further development of my cap table before they would invest. It felt like a chicken and egg problem - need investors to get other investors. On par for what many people told me when I started:

“Get one or two big names early and the rest will follow.”

Man, was that true.

This frustrated me. I believed/believe that your conviction in an investment is the only thing that can’t be outsourced.

If you’ve read any book on public markets investing you’ll hear this drum beat nonstop. Following other people’s decisions without doing the work yourself is a recipe for capitulating when the market inevitably fluctuates lower or a material negative catalyst occurs that you possibly could have foreseen if you did the work yourself. You blame the person who tipped you off and you never improve your investing process.

After more thought and deeper conversations with people who told me no, I’ve concluded that the investors in this space feel like a cartel. Not the scary kind, but a group of people with a cooperative agreement to support mutual interests. I didn’t like this at first because it felt arbitrary. What I’ve realized is that is one of the benefits of playing long term games with long term people - shared mutual trust.

The big wall I felt like investors couldn’t scale was my background. While I thought it was everything these folks wanted, it wasn’t the typical pattern seen in the space.

I didn’t have an MBA. No PE experience. Didn’t go to a top 7 school. Didn’t have a partner.

Nobody said this, but I could feel it.

Enough crying though. All in all it was a valuable month meeting some fantastic people at places like Nashton, Reframe, Hadley FO, Triology, Relay and others.

If I were doing this process again, here’s what I’d change.

I’d start much earlier.

Long before the raise. I’d be building real relationships with the people who actually write checks.

I’d let them see my work before they see my pitch. There’s only so much they can diligence about you on quantitative aspects. The interviews are much more qualitative. If you’re curious about questions they ask you can read about that here.

For vets and others coming from outside the typical search fund pipeline, this is even more important. You might have leadership experience. You might be ready to own and run a business. But in this game, "ready" and "funded" are two different things. Build relationships early. Let people see your trajectory. Get their buy into you and where you’re going.

A person who did this really well is Alex Bridgeman of the Think Like an Owner Podcast. His raise was extremely quick because he was bringing on investors and operators in the space, talking about search, and in a very public fashion. When it was time to raise, he’d already had conversations about the topic.

You don’t have to start a podcast and in fact I don’t actively recommend it even though it’s one of the highest leverage things I’ve ever done. It can be a hack though to insert yourself into the circles you want to be running in.

For those considering search: this path isn’t for everyone. But it is for people with big appetite and not enough room to grow.

If you’re sitting in an entry-level role, bored out of your mind, knowing you can do more, this might be for you. It’s a chance to skip the ladder, not by avoiding hard work, but by compressing the timeline.

It’s about putting yourself in the highest leverage seat at all times.

Military folks are especially suited to this if they don’t let entitlement and laziness creep in post service. It’s high risk, high output, maximum responsibility. And if that sounds like you, I encourage you to explore it.

I’ve launched headlong into talking to owners and looking for a great business to buy. Let’s get to work.

Brock

Have a good weekend.