Record 94 search funds launched in US in 2023 with $682 million invested
A record number of new investment vehicles backed by external capital were established this year, representing a surge in the 'search-fund investing' model where young entrepreneurs buy existing firms to become CEOs.
Entrepreneurs known as search fund investors are increasingly buying established businesses to install themselves as chief executive officers. This practice involves setting up a specific type of fund called a search fund, which attracts money from institutional investors and wealthy individuals. Data for 2023 showed that 94 external search funds were launched in the United States, marking a record high. These funds collectively invested $682 million in the companies they purchased across 2022 and 2023. New York entrepreneur Aliev, who previously worked in finance before pursuing her MBA, noted she avoided making assumptions about how a firm should operate. She stated her initial approach was simply to observe and learn rather than immediately telling teams what to do. Search Fund Partners, Aspect Investors, and Anacapa Partners are among the US investment firms specializing in backing these young entrepreneurs. While some question the wisdom of putting a twenty-something in charge of an established business, a report by Yale School of Management found that high rates of return are available through these funds.
