We were lucky enough to host several search fund investors on campus that succeeded in acquiring and exiting their businesses and starting search funds. Interestingly, the search space is rapidly evolving and it is interesting to compare what search was like pre- and post-covid.
First, technology appears to be playing a huge role in search operations. Searchers can now target large numbers of businesses. Of course, searchers will find similar businesses, and as a result, those owners will get a lot of the same outreach from searchers. There also appears to be consensus growing around a ‘tech-stack’ that searchers use: Grata for prospecting, reply.io for outreach, and so on.
Second, investor PPMs are growing in specificity and length. In the past, when search was much more of a frontier, PPMs would be fairly short. It is interesting that investors are asking for more in the PPM as it implies that there is some differentiating information in PPMs that are benefiting their investment decisions.
Third, and certainly not the last, investors are becoming more like search-oriented portfolio managers. The role of a search investor used to be much more informal and based on a hunch about a searcher. Nowadays, as searchers are forced to specialize and differentiate, investors aim for diversification to improve fund performance. Factors such as searcher background, strategy and geography are just a few of metrics on which investors are basing their portfolios on.
All of this is to say that the world of search is evolving rapidly. Just five years ago, the world of search was much less accessible. Now, with the cat of the bag so to speak, the industry is becoming professionalized, and the implications are worth considering for prospective searchers.