Permanent Equity

March 23, 2023

by an member from Universidad Nacional de Educación a Distancia in 11100 San Fernando, Cádiz, España

Has anyone explored the posibility of building a search fund like vehicle, but with a permanent equity capital base?
Does anybody know any examples of this? How would you try to do it?
I'd love to know your thoughts!

1 Like

11 Replies

106 Views

Replies

Reply by a searcher
from National University of Ireland, Galway in Seattle, WA, USA

We have taken an target first and then raise approach to date. Next time we may try to raise capital in advance. I think this is what you mean. You need to have a very strong personal competence credential in addition to a focused strategy that plays to your unique competencies. Or it can be a unique target niche. In the absence of an actual target, the investors need a compelling reason to believe. Maye you are ex Amazon with a highly experience supply chain / logistics type partner and you are going to to build a family of 2P brands on Amazon operating on a shared infrastructure. Something like that might work.

Reply by an investor
from Union College in New York, USA

I would look to the syndicated real estate world as guidance for this objective. This model has been around for a while and is proven. There's a partnership agreement outlining the details between the GP (you) and the LPs (outside investors). LPs typically get some sort of pref return, then economics are shared between GP/LP once the hurdle is met.
Worth mentioning, this is migrating away from being a "SearchFund" and towards just a private partnership. Therefore echoing a statement above, in order to be able to raise capital in this structure, you'd liekly need some proven operator experience.

+9 more replies.

Join the discussion