What are the pros and cons of the Search Fund model vs Venture Capital?
I would like to understand the differences, and would appreciate your comments and opinions.
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by a searcher
from Universidad de los Andes - School of Management
in Bogotá, Colombia
in Bogotá, Colombia
7yrs ago
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by a searcher
7yrs ago
from Harvard University in New York, NY, USA
from Harvard University in New York, NY, USA
I think the biggest difference is level of involvement in the companies.
In the canonical Search Fund model, you are buying and then operating a single existing company. You become the day-to-day manager and all decisions go through you. You have to be the one that gets up at 6am and goes home at 9pm. In exchange u are the boss and you own 100% of the company.
VCs typically tend to make investments. You do not own 100%, you are not the day to day manager. The founder/mgmt team remains in place to build and grow the company. You can either do nothing (wholly passive VC) and hope the company does well, or you can help them along the way via consultations, introducing them to business contacts, etc.
In the canonical Search Fund model, you are buying and then operating a single existing company. You become the day-to-day manager and all decisions go through you. You have to be the one that gets up at 6am and goes home at 9pm. In exchange u are the boss and you own 100% of the company.
VCs typically tend to make investments. You do not own 100%, you are not the day to day manager. The founder/mgmt team remains in place to build and grow the company. You can either do nothing (wholly passive VC) and hope the company does well, or you can help them along the way via consultations, introducing them to business contacts, etc.
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by a searcher
7yrs ago
from Southeastern University in Hyderabad, Telangana, India
from Southeastern University in Hyderabad, Telangana, India
I thought Search Fund is also very similar to VC where in you are identifying a business to purchase but for investors i.e. you hire an execution team but not get involved personally in day-day operations.
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