By now many, if not most, of us have read the Stanford Primer on Search Funds. On the second page, it mentions that “More than one in four search funds have not acquired a company despite the principal(s) spending 24 months in this pursuit.” My question is why? Perhaps this is a naïve question because my business partner and I are still in the infancy stages of raising our fund. That said, it seems that with two whole years of research, due diligence, and fundraising, acquiring a company would be more than doable.

Do partnerships breakup? This is common in other startups, so I’d imagine that it may apply here. However, with proper research at the beginning, most search funders would have a general idea of what they’re getting into. I doubt that if one was able to raise the capital for an acquisition, they would choose not to invest. With that, my best guess is that, like most things, it comes down to money. Do most funds fail simply because they are unable to raise the required capital?