Search Funds are a unique opportunity to invest in high-quality businesses at attractive valuations—led by driven entrepreneurs, supported by seasoned advisors and boards, achieving outsized growth and performance
Search Funds and ETA explained
Search. Acquire.
Create Value.
Search. Acquire. Create Value.
Entrepreneurship Through Acquisition (ETA) enables aspiring entrepreneurs to acquire a profitable business and run it as CEO. It’s a faster, lower-risk path to entrepreneurship than starting from scratch
Search Funds are a proven ETA vehicle, where investors back an entrepreneur to identify, acquire, and operate a company
The 4 Phases of Search Funds
Raise Search Fund
Search & Acquire
Manage & Grow
Exit & Return Capital
1. Raise Search Fund
Aspiring and highly motivated entrepreneurs raise €300-700k from 10-20 experienced investors to fund their search and diligence costs
Investors receive the right to participate pro rata in the subsequent acquisition and a 1.5x “step-up” of their search investment
Entrepreneurs receive up to 25-30% ownership in the business along journey
2. Search & Acquire a Target Company
Entrepreneurs source targets via a leveraged buyout with equity provided by investor base
3. Manage & Grow the Company
Entrepreneurs operate and improve the business as full-time CEOs, supported be experienced board members
The entrepreneurs deploy PE style value-creation techniques, such as add-on acquisitions
4. Exit & Return Capital to Investors
Entrepreneurs sell the business and return capital to the investors
Investors may also seek earlier liquidity through secondary transactions
Entrepreneurs may choose to continue running the business
Search Fund Performance
Search funds outperform other asset classes
Due to perfect alignment of:
- Top-tier entrepreneurs
- Attractive deals (good businesses at low valuations)
- Experienced investors (mentoring and acting as board members)
Annualized net returns of different asset classes (%)
Number of Search Funds globally
Search funds are becoming more popular and global
INSEAD is now one of the fastest-growing sources of Search Funds globally, with >40 SFs raised in the past 5 years
INSETA has an exclusive collaboration with INSEAD, but we invest in entrepreneurs from all backgrounds
Sources:
Net IRR of search funds derived by applying the typical fee and carry structure to the gross IRR of 35% observed in the Stanford search fund study, Net IRR for PE and VC taken from Pitchbook’s Global Fund Performance Report (Q4 2023), S&P500 returns from Investopedia, Numbers of search funds globally is aggregated from the Stanford Business School and IESE 2024 Search Fund studi
INSETA has outperformed the market by combining three critical success factors of search fund investing:
Access to talent
INSETA’s exclusive collaboration with INSEAD and the team’s outstanding reputation enables direct access to the best talent
Investing acumen
INSETA has decades of experience in investing and pattern recognition
Mentorship
INSETA and our large pool of experienced advisors and board members support Entrepreneurs in each phase