The Top Search Fund Investors

I get it. As if finding and vetting a solid deal wasn’t hard enough, you then must find investors.

I was a searcher. I know how hard it is to find savvy investors who understand SMB deals.

Good news though: search funds have ballooned in popularity (thanks Stanford search fund study!). Dedicated funds, family offices, and high-net-worth-individuals (HNWI’s) are investing more and more in the search fund asset class.

So, just who are the most active investors in the space?

A List of the Top Search Fund Investors

1. CapitalPad (best self funded deals)
2. Smash Ventures (for self funded)
3. Aspect Investors (for traditional search funds)
4. Anacapa Partners
5. WSC & Company (traditional)
6. Endurance Search Partners (family office)
7. Miramar Equity Partners
8. How to invest in searcher deals

 

CapitalPad

CapitalPad is a search fund investing platform where self-funded searchers connect with search fund investors for equity investments.

It simplifies the process for both parties.

Searchers have an easier time finding access to equity capital from investors who see their vision.

Investors have an easier time getting access to this asset class.

CapitalPad helps searchers to:

• Raise capital for acquisitions (at no cost).
• CapitalPad connects sponsors with investors (for both self-funded searchers and independent sponsors).
• Simplify the raising process.
• Automate the NDA and deck distribution process.
• Pool investors into one line on the cap table.

Perks for searchers:

• Access to larger amounts of capital in one location.
• Access to diverse pool of investors interested in searcher deals.
• Having only one location to raise all needed capital.
• Simplifies the closing and post-closing process.
• Bonus: The CapitalPad team can be VERY hands-on if desired post-close. Handling website redesigns, complete search marketing campaigns, and more.

Perks for investors:

• Get access to more self-funded search fund deals in one location.
• Be able to write smaller checks to better diversify (since investor capital is pooled).
• Standardized deal presentations.
• Vastly improved deal-flow

 

Requirements:

• In order to raise on CapitalPad, the searchers need to have ready deal with an accepted LOI.
• In order to invest, investors must be accredited.

Investors invest on a deal by deal basis, so they need to see the presentation (also, they will not fund the initial search for “traditional” searchers).

 

Smash Ventures

Smash Ventures is a group of individual investors who co-invest together on search fund deals, including independent sponsors and self-funded searchers raising money on a deal-by-deal basis. The group is comprised of experienced entrepreneurs who now allocate back into the industry, supporting others the same way that they would have wanted.

They are not the largest capital stack out there, with check sizes into deals being between $50,000 (at the smallest), and $500,000 at the largest. Clearly they are best suited for search fund deals where there is a gap between the debt and equity needed to close the deal. The Smash group can help close that gap.

Smash generally deals with self-funded searchers who bring ready-to-execute deals that can be instantly evaluated. Outside of search fund investing, Smash also buys minority stakes in existing businesses, giving entrepreneurs liquidity instead of them being forced to sell in entirety.

Smash will work with search fund buyers using either SBA loans or private credit, but it’s important to note that no one in the Smash group will go over the equity threshold requiring a personal guarantee.

One bonus of working with Smash is that they fully own an online marketing agency in which they give free access to all of their portfolio companies. A nice add-on to get the new ventures improving from the start.

Pros

• They are not a fund (no LPs), so they can move fast.
• Have a value-added service via the marketing support.
• They are good for searcher deals that need a little extra support to fill.

Cons

• They do not write the largest checks out here
• They will not invest over the personal-guarantee threshold
• They usually only do deals that pay regular cash distributions starting in year-one.

 

Aspect Investors

Aspect Investors is one of Dallas-based private equity firms specializing in search funds, which collaborates with entrepreneur-CEOs to acquire and manage private companies in the $5-$50 million revenue range.

Founded in 2012 by Andy Love, who previously led Behavioral Health Group, the firm boasts a seasoned team. Andy has two decades of experience and invested capital in nearly 200 search funds. Partners Brad Buser and Mike Schmitz offer decades of private equity experience. B.A. Cullum has expertise in acquisitions, notably from ClubCorp, and holds degrees from Stanford and MIT.

All of this expertise combined can offer stable cash flows to the target company.

The firm underscores the potential of search funds, highlighting the symbiotic relationship between searchers, companies, and investors.

Success Stories:

• Apex Technology Group was founded by a search fund backed by Aspect Investors in 2005. The company provides IT consulting services to businesses in the healthcare industry. In 2017, Apex was acquired by Kforce Solutions for $100 million.
• Bolster was founded by a search fund backed by Aspect Investors in 2011. The company provides software that helps businesses manage their customer relationships. In 2019, Bolster was acquired by Salesforce for $1.5 billion.

 

Anacapa Partners

Anacapa Partners is a San Mateo-based firm founded by Jeff Stevens, using the search fund model to support first-time entrepreneurs.

Established in 2010, the firm emphasizes industry-neutral investments, aiming for a diverse portfolio.

They have a portfolio of 88 diverse investments and have successfully concluded funds worth $79M and $99M. The firm’s active portfolio generates an impressive $425M in annual revenue.

Anacapa’s unique approach involves closely collaborating with entrepreneurs, often recent MBA graduates or military veterans, guiding them throughout the investment process. They also offer board representation and maintain proactive relationships with their portfolio companies.

Success Stories:

• Blueshift, which provides marketing automation software to businesses. In 2021, Blueshift was acquired by Salesforce for $1.6 billion.
• Emsight Health, which provides software that helps hospitals manage their clinical data. In 2020, Emsight Health was acquired by Allscripts for $400 million.

 

WSC & Company

WSC & Company is a Charlotte-based fund of funds established in 2012.

Specializing in lower and middle-market businesses, they focus on the business products and services sectors. With a team of 8 professionals, they’ve made 89 investments, managing 66 companies and completing 14 exits. Their recent ventures span areas like IT consulting and business software.

The firm is known for its dedication to search funds, emphasizing long-term collaboration and support for searcher success.

They prioritize private company ownership transfer and micro cap private equity returns, offering unique investment opportunities. Their approach stresses the importance of legacy, fit, and value alignment, especially for family businesses.

Success Stories:

• Badger Stone & Trench, founded by Badge Stone, a co-founder of WSC & Company. The company provides water and sewer construction services. In 2017, Badger Stone & Trench was acquired by MasTec for $100 million.
• Perimeter Security, also founded by Badge Stone. The company provides security software and services. In 2019, Perimeter Security was acquired by TPG Growth for $200 million.

 

Endurance Search Partners

Endurance Search Partners, based in Plantation, Florida, is a progressive family office established in 2009.

They collaborate with promising search fund entrepreneurs, offering mentorship, a vast network, and resources. Their goal is to nurture these entrepreneurs into exceptional leaders. With a history of over 250 search fund partnerships, the firm emphasizes flexible, innovation-oriented investment strategies.

A typical target company for them would be in growth sectors like vertical market software, healthcare, financial products, and business services.

Their unique approach allows for enduring investments and adaptable decision-making, with the firm’s capital sourced entirely from its partners.

Success Stories:

• CanSource, which provides business insurance solutions to businesses in Canada. In 2022, CanSource was acquired by Aon for $100 million.
• EPIC Insurance, which provides commercial insurance solutions to businesses in the United States. In 2023, EPIC Insurance was acquired by Arthur J. Gallagher & Co. for $200 million.

 

Miramar Equity Partners

Miramar Equity Partners (MEP) is the private equity arm of Miramar Holdings, established in 2018, and based in Dallas.

Led by Kurt Leedy and Kyle Coots, MEP specializes in investing in mid-sized businesses with sustainable market positions, with a keen interest in vertical market software, communications infrastructure, healthcare, and tech-enabled services.

Their approach is distinct, as they offer patient and flexible capital, free from the constraints typical of traditional equity funds. This strategy emphasizes long-term growth and fostering deep partnerships with founders and management teams.

Their commitment is to collaborate with passionate executives, aiming for sustained growth and meaningful partnerships in the business landscape.

Success Stories:

In addition to some of the companies listed above, Miramar Equity Partners has also backed a number of other successful search funds, including:

• AppFolio, which provides software that helps businesses manage their property management.
• Fluidigm (now Standard BioTools Inc) which provides life sciences tools and technologies.

Additional information on the search fund asset class

A few extra details on the space.

 

Aggregate returns from search funds

How to invest in search funds

If you are an accredited investor, then here are your investing options:

1. Contact university search fund programs
2. Invest in ready-to-go deals at CapitalPad
3. Look for deals on SearchFunder
4. Cold outreach on Linkedin
5. Visit search fund conferences
6. Allocating with a fund

5 Phases of a Search Fund Investment Model

A search fund is an entrepreneurial investment model where an entrepreneur raises capital from angel investors to finance the search for a privately held company to acquire and manage.  The entrepreneurship through acquisition (ETA) model is gaining steam right now. This can enable an acquisition entrepreneur to acquire an existing business or (rarely) fund their own venture without the need for traditional venture capital, instead using more M&A private equity types of investors. If you’re like me then you’re probably thinking about things like SBA loans and SMB investors (small & medium size businesses).

The model’s concept is built around the belief that talented entrepreneurs can identify, acquire, and grow a business when given sufficient time, resources, and mentorship.

Now there are traditional search funds, as well as self-funded searchers (also called “fundless sponsors”), where the individual finds and vets the deal, takes on the debt (usually through an SBA loan), and then funds the equity injection internally and by raising money from equity investors.

Here’s a breakdown of the typical structure of a search fund:

1. Fundraising

The process begins with fundraising where entrepreneurs solicit funds from investors to cover the costs associated with finding a suitable business to purchase. This initial fund, usually in the range of $300,000 to $600,000, is typically raised from a diverse group of investors who contribute between $25,000 and $75,000 each.

2. Search Phase

Once the funds for a traditional search are raised, the entrepreneurs enter the search phase, which can last anywhere from one to three years. During this time, they seek a suitable small to medium-sized business to acquire. The entrepreneurs often focus on businesses in industries with which they are familiar and where they can leverage their skills and experience.

3. Acquisition Phase

When a suitable target business is identified, the acquisition entrepreneurs present the opportunity to the investors, who then decide whether to invest additional funds to finance the acquisition. If the investors agree to move forward, they will usually provide 70-100% of the equity needed for the purchase. You’ll also need to round up debt via lenders. Sometimes these are private lenders, sometimes these are SBA loans.

4. Post-Acquisition Management

After the acquisition, the entrepreneurs typically take on significant management roles in the acquired company, often serving as CEO or President. They work to grow and improve the business over a period of usually 5-10 years. This can vary based on the model.

• For traditional search funds, the acquisition entrepreneur generally takes the CEO role.
• For self-funded searchers, the acquirer will almost always run the company.
• For independent sponsors, the deal sponsor will frequently inject management (or maintain existing management), and the sponsor will generally take over the chairman of the board role in the organization.

5. Exit

Finally, the entrepreneurs aim to sell the business and distribute the proceeds among the investors and themselves.

Throughout this process, investors play crucial roles, providing not only capital but also mentorship, strategic advice, and a robust network of contacts. In return for their capital and support, the investors receive a portion of the equity in the acquired company, offering them the potential for significant returns upon a successful exit.

Tip – Be able to explain why you are worth backing

I messed this up the first time I did it, so hopefully you can learn from my mistakes and do better.

If you’re approaching an investor pre-LOI, be sure to have a very good answer to explain why they should back you. EVERYONE is looking for a 3x multiple, recurring revenue, recession resistent, low customer concentration company to buy. That “criteria” is not enough, you’ll need to be able to explain why YOU are worth paying attention to.

If you’re post-LOI, then these topics should already be known and be clearly expressed

• Investor models (that they can check)
• Your target hold time
• Expected IRR (internal rate of return)
  • You should have numbers prepared for a base-case scenario, as well as a best-case and negative-case scenario IRR, with reasons to support your models.
• The total expected MOIC (multiple on invested capital).
• Deal terms (the preferred return, step-up basis, and liquidity preference)
• Plans for return of capital (investors love an accelerated return of capital)
• The equity split after the preferred return is paid off.

 

Value-add Investors

How can the right investors help your company post-close?

If you’re lucky enough to have your pick of capital providers (rare), then turning your attention to who can add the most value post-acquisition can be a big win.

Here are some key roles they play:

• Mentorship: Given that many search fund entrepreneurs are at an early stage in their careers, investors often serve as mentors, offering guidance based on their own business experience. They can provide valuable insight into the process of sourcing talent, dealing with finances, and guides to managing a company.
• Growth Teams: Some investors, such as the CapitalPad group, provide extensive hands-on marketing help post-close. They personally handle website redesigns, search marketing campaigns in-house, and bring searchers into their network of talented service providers
• Strategic Advice: Many investors have extensive business experience. They can provide strategic advice on a range of issues from identifying promising industries to positioning the company for growth post-acquisition.
• Network Access: Investors usually bring with them a rich network of contacts, which can be instrumental in sourcing deals, vetting acquisition targets, recruiting talent, and finding potential buyers at the time of exit.
• Due Diligence and Decision Making: During the acquisition phase, investors assist in performing due diligence on the target company. Their expertise can be vital in assessing the company’s financial health, operational efficiency, and growth potential.
• Governance: Post-acquisition, investors often continue their involvement by serving on the company’s board of advisors or board of directors. In this role, they contribute to the company’s strategic direction and oversight.

 

Your Turn

In the past I spent so much time chasing down investors. Thankfully, search fund investing as unconventional now as it once was.

Some of the investors that I worked with provided a unique blend of capital, mentorship, hands-on help, and operational insight was instrumental in my newly acquired small businesses success.

I hope you have the same great results that I did!

Updated: April 19, 2025