A search fund is an investment vehicle in which a group of investors funds an entrepreneur (the "searcher") to spend one to two years finding, acquiring, and then operating a single established business. Investors back the search costs and the acquisition in exchange for equity and a return, while the searcher earns a meaningful ownership stake.
The two-stage capital
| Stage | What investors fund |
|---|---|
| Search (1 to 2 yrs) | Searcher salary + deal costs |
| Acquisition | Equity to buy the target (often with SBA or bank debt) |
Contrast with a self-funded search, where the entrepreneur uses their own capital and often an SBA 7(a) loan, keeping more equity but taking more personal risk.
Why it matters when buying a business
The search fund is the classic ETA path for buyers who'd rather run a proven business than start one, and who want backing instead of going it alone. Most Acquisition Ace-style buyers use the self-funded, SBA-financed version, lower dollars, more control. Know which model fits your capital and risk appetite.
