An alternative path to to becoming an entrepreneur

A search fund is an innovative investment model that enables ambitious young entrepreneurs to become owners and managing directors of an established small or medium-sized enterprise (SME) – as an alternative to founding a start-up or pursuing a traditional career in a large corporation or consulting firm.

The concept was developed in 1984 by H. Irving Grousbeck during his time at Harvard and subsequently Stanford University, and has since established itself as a recognized path to entrepreneurship.

While this model has long been widespread and well-known in the US, it is now also gaining popularity in Europe – as an attractive alternative for entrepreneurial talents who want to take over and develop a company.





How the search fund model works




A search fund typically starts with one or two young entrepreneurs – known as "searchers" – who raise initial capital from a group of experienced investors (usually 10–15 parties). This funding finances a focused, two-year search to acquite one great business.n
During the search phase, the searchers look for healthy, profitable businesses with stable recurring revenues, loyal customers, and room to grow. Most targets are owner-managed small businesses with an EBITDA of €1–4 million, often in fragmented markets and in many cases, the owner is looking to sell simply because no internal successor exists.

Once a promising company is identified and due diligence is complete, the searchers invite their investors to fund the acquisition. Each investor has the right, but not the obligation, to participate in proportion to their share in the search phase.
Throughout the entire process, investors act as more than capital providers. They serve as mentors, contributing their experience, networks, and strategic guidance to support the searchers at every step.

After the acquisition, the searchers take over as operators and upon achiving certain performance milestones – become the company's largest shareholders. There is no fixed exit date: the goal is to build and lead the business for the long term.


A search fund typically moves through five distinct phases:


Win-win for entrepreneurs and investors

The search fund model creates a genuine win-win situation for all parties involved.

Motivated young entrepreneurs get the chance –  Once a promising company is identified and due diligence is complete, the searchers invite their investors to fund the acquisition. Each investor has the right, but not the obligation, to participate in proportion to their share in the search phase.
Throughout the entire process, investors act as more than capital providers. They serve as mentors, contributing their experience, networks, and strategic guidance to support the searchers at every step.
backed by experienced investors - to acquire and run their own established business, without the need to have significant capital themselves. They gain not just funding, but also hands-on expertise and the networks of their investors and board members.

Investors, in turn, access an attractive niche asset class and share directly in the operators' success as co-owners of the acquired company. Studies by Stanford University and IESE Business School show average IRRs of around 30% p.a.. But beyond the financial returns, many investors value the chance to mentor the next generation of entrepreneurs.

The model also addresses a pressing real-world challenge: many owner-managed businesses have no internal successor. Search funds bridge that gap, connecting these companies with a new generation of entrepreneurial owners, preserving what's been built, and setting the stage for continued growth.













Why Valmaris believes in the Search Fund Model

At Valmaris, we are a long-term, entrepreneur-led investor. Our own entrepreneurial values - characterized by a long-term perspective, sustainability, trust, and transparency - fit perfectly with the search fund concept and its unique ecosystem.
We appreciate the partnership-based approach of this model and its focus on sustainable value creation, as it aligns with our philosophy of “entrepreneurs backing entrepreneurs.”
Beyond capital, we actively contribute our expertise, operational experience, and network to support ambitious searchers and operators in building exceptional companies.