Raising search fund capital: the pitch, investor terms and the first year budget
Raising search capital means pitching a group of investors on you, your acquisition thesis and your plan, agreeing a budget and terms, and documenting the investment under securities law; IESE's 2026 data shows non-U.S. funds raised a median of about $502,000 from 15 investors in a median of six months.
Key takeaways
- Investors back the person first. Your background, references, learning speed and honesty carry more weight than your industry thesis.
- IESE 2026 (funds outside the U.S. and Canada, 2024 and 2025 launches): median 15 investors, about $502,000 of search capital, $450,000 for solo searchers and $649,000 for partnerships, median six months to raise.
- Search capital buys the right to look and, for investors, the right but not the obligation to invest in the acquisition. Terms for what investors receive and what you earn are negotiated, and the Stanford primer is the reference.
- Sell securities only under an exemption and with a securities lawyer. Rule 506(b) bans general solicitation, so do not post the offer publicly.
What you are asking for
In the traditional model you ask a group of investors for a modest amount of search capital. That money funds you and the search. You are not asking for the money to buy a company. If you find one, you go back to the same investors, and to lenders, for the acquisition capital. Investors who put money into the search phase usually receive the right but not the obligation to invest in your acquisition, which lets them decide after seeing a specific company.
That structure shapes how you pitch. The investor is making two decisions over time. The first is whether to back you with a few tens of thousands of dollars each. The second, much larger, is whether to invest in the company you find. At the first decision they are underwriting you, your process and your ability to find a good deal. Treat the pitch as a hiring decision: you are asking them to hire you to find and run a company.
What recent data says about size and speed
The most recent public medians I could verify come from IESE's International Search Funds 2026 study, which covers funds outside the United States and Canada. For funds launched in 2024 and 2025, the median fund had 15 investors and about $502,000 of search capital. Solo searches raised a median of $450,000 and partnerships raised $649,000. The median annual searcher salary was $100,000, and salaries made up roughly 45 percent of search capital for solo searchers and 60 percent for partnerships. The median time to raise rose from five to six months.
Stanford's U.S. and Canada data is in its primer, which requires a registration form to download. A third-party summary puts U.S. search capital at roughly $400,000 to $500,000 per searcher for about two years, but I could not verify that in the primer itself. Read the primer and ask two or three recent U.S. searchers what they raised before you set your target.
| Group (IESE 2026, non-U.S., 2024 and 2025) | Median search capital | Median salary | Salary share of capital |
|---|---|---|---|
| All funds | About $502,000 | $100,000 a year | Not reported for all funds |
| Solo searchers | $450,000 | $100,000 a year | About 45 percent |
| Partnerships | $649,000 | $100,000 a year | About 60 percent |
Before you pitch: what to prepare
Investors will ask for the same materials. Build them before your first meeting so that every conversation moves faster.
- A one-page summary of who you are, why you will be a good CEO, your acquisition criteria and your search plan.
- A pitch deck of ten to fifteen slides. Typical sections are your background, why search funds, your criteria, your sourcing plan, a budget, a timeline, your team and advisors, and the ask.
- A list of references who have managed you or worked with you, who will take a call and speak honestly.
- A one-page budget and a 24-month plan (see the illustrative budget below).
- A tracker of every investor you contact, with date, stage and next step.
- A draft of the investor terms you want to propose, reviewed by a lawyer who has done search fund financings.
Who invests and how to reach them
Search capital usually comes from individual investors with operating or investing experience, and from funds and family offices that back searchers. Many investors in this space have backed several searchers and know the terms. Warm introductions work better than cold outreach: ask professors, former colleagues, other searchers and advisors who know you to introduce you to people who have backed searchers. University programs and communities such as Searchfunder and this site can show you who is active.
Do not assume the largest check is the best. A smaller investor who is an operator in your target industry, takes your calls and opens doors to owners may be worth more than a passive investor. Ask every investor how they help searchers after closing.
Securities law basics
Offering a stake in a search fund is offering a security. In the United States, that normally means relying on an exemption from registration, and many private offerings use Regulation D. Under Rule 506(b), the SEC states that an issuer can sell to an unlimited number of accredited investors and up to 35 non-accredited investors in any 90-day period, but may not use general solicitation or advertising, and must file Form D within 15 days after the first sale. That is why you should not post your fund offering publicly or announce it as a call for money. Rules differ outside the U.S. and may change, so use a securities lawyer, not a template from the internet.
An illustrative first-year and second-year budget
The budget below is illustrative. It is built so the salary line matches IESE's median ($100,000 a year over two years, about 45 percent of a $450,000 solo raise). Every other line is a planning assumption, not a statistic. Replace each line with quotes from your own lawyer, data providers and travel plan.
| Line (illustrative) | 24 month amount | Notes |
|---|---|---|
| Salary | $200,000 | Two years at IESE's $100,000 median |
| Benefits and payroll costs | $40,000 | Planning assumption; varies by state and plan |
| Legal, fund formation and early deal work | $60,000 | Planning assumption; get a quote |
| Diligence costs on signed LOIs (accounting, QoE scoping) | $70,000 | Planning assumption; failed deals still cost money |
| Travel, site visits and events | $40,000 | Depends on geography |
| Data, lists and software | $25,000 | Business databases, CRM, email tools |
| Contingency | $15,000 | Search slips are common |
| Total | $450,000 | Matches IESE's solo median |
Terms to negotiate
I could not verify specific U.S. figures for step-ups or vesting in a primary source, so this list names the terms rather than quoting percentages. Read the Stanford primer for current market ranges, and have a lawyer who knows search funds negotiate with you.
- What investors receive for the search capital: usually the right to invest in the acquisition and a defined return on the search capital if you close.
- What happens to the search capital if you never find a deal: it is usually lost, and the structure should say so plainly.
- Your equity: how much, when it vests, what performance hurdles apply, and what happens if you are removed or leave.
- Governance: board seats, information rights, reporting schedule and approval rights over a purchase.
- Expense approval: how much you can spend without asking, and what reports you owe.
- Time commitment and exclusivity: whether you can have another job during the search.
- Partnerships: if you search with a partner, who owns what, and what happens if one leaves.
- Wind-down: what happens to leftover capital if you stop.
How to run the investor process
A repeatable process keeps momentum, which matters because investors compare you with other deals.
- Week one: finish the deck, one-pager, budget and reference list. Practice the pitch with two people who will be blunt.
- Weeks two and three: send twenty to thirty warm introductions and book first calls. Track every contact.
- Weeks four to eight: second meetings, reference calls and term discussions. Ask each interested investor what check they might write and what they need to decide.
- After commitments: sign documents with your lawyer, confirm funds, and set a calendar of investor updates before you begin the search.
- Keep your pace honest. IESE's median time to raise is six months, so plan for runway, not a quick close.
Pitch email template
Use this for a warm introduction. Replace bracketed text with true details and keep it under 150 words.
Subject: Introduction from [Mutual contact]: search fund for [industry or region] Hi [Investor name], [Mutual contact] suggested I write. I am [Your name], currently [role] at [company], where I [one verified accomplishment]. I am raising a search fund to buy and run one [type of company, e.g. B2B services business with $1M to $3M of EBITDA] in [region]. My plan: a 24 month search, [number] outreach messages to owners each week, and a focus on [two criteria]. I am raising [amount] from [number] investors, with a first close targeted for [month]. I have attached a one-page summary and a ten slide deck. Could we speak for 20 minutes next week? I am also glad to send references first. Thank you, [Your name] [Phone] | [LinkedIn URL]
Investor update template
Once you have investors, send a short update on a fixed schedule. This one works for a monthly or quarterly email.
Subject: [Fund name] update: [Month Year] Summary (3 lines): - Where we are: [for example, 140 owner conversations, 3 active diligence calls, 0 LOIs] - What changed since last update: [one sentence] - What I need from you: [one ask, for example an introduction to an owner in X] Numbers this period: - Outreach sent: [n] | Replies: [n] | Calls: [n] | CIMs or financials reviewed: [n] | LOIs signed: [n] - Cash spent this period: $[amount] | Cash remaining: $[amount] | Months of runway: [n] Pipeline: - [Company type A, state, revenue range]: [stage and next step] - [Company type B, state, revenue range]: [stage and next step] What I learned: [one or two specific lessons, including a thing that did not work] Next 30 days: [three concrete goals] Thank you, [Your name]
Mistakes that cost searchers capital
- Pitching a thesis before showing you can execute a search. Investors want proof of process, such as how many conversations you will have each week.
- Raising too little. A search slips. If your plan needs 24 months and your capital covers 14, you will ask for more money mid-search from a weaker position.
- Promising a specific outcome. No honest searcher can promise a deal; IESE's data shows the average successful international search signed 4.6 LOIs, and Stanford's aggregate acquisition rate is 58 percent.
- Skipping the lawyer. A defective investment agreement can hurt you at closing, when investors and lenders review the documents.
- Hiding bad news in updates. The investors who stay with you are the ones who hear about problems early.
Pitch deck outline
A ten to fifteen slide deck is enough. Each slide answers one question that an investor has.
| Slide | Question it answers | Content |
|---|---|---|
| 1. Title and ask | What is this? | Your name, the fund name, the amount you are raising and the target close date |
| 2. Why me | Why will you succeed? | Three to five facts from your history that show you can lead and learn fast; names of references |
| 3. Why search funds | Why this model? | One slide on the model, citing Stanford's 2026 data (58 percent acquisition rate; around 20 months; aggregate IRR 33.9 percent and ROI 4.75x) |
| 4. Criteria | What will you buy? | Size, revenue quality, concentration, industry, geography, owner situation |
| 5. Sourcing plan | How will you find it? | Channels, weekly targets and the tracker you will use |
| 6. Pipeline math | Is the plan realistic? | Targets for outreach, calls, financial reviews and LOIs, with the IESE benchmark of 4.6 signed LOIs for searchers who closed |
| 7. Evaluation approach | How will you avoid bad deals? | Your process for normalizing earnings, diligence and advisors |
| 8. Financing plan | How will you pay for it? | Senior or SBA debt, seller note, investor equity, with the SBA 10 percent equity rule if relevant |
| 9. Budget and timeline | What does it cost? | The 24-month budget and milestones |
| 10. Team and advisors | Who helps you? | Mentors, lawyer, accountant, board candidates |
| 11. Terms | What do investors get? | Summary of investor rights and your equity, reviewed by counsel |
| 12. Risks | What could go wrong? | No deal found, deal fails after LOI, overpaying, a bad hire, and your plan for each |
| 13. Next steps | What do you want now? | A call, a reference check, a commitment amount and date |
One-page summary template
Send this with your first email. Keep it to one page.
[YOUR NAME] SEARCH FUND: ONE-PAGE SUMMARY Who I am [Two sentences. Current role, years of experience, one concrete accomplishment with a number you can document.] What I will buy [One company in [industry or industries] in [region]. Revenue $__M to $__M. EBITDA or SDE $__M to $__M. Recurring or repeat revenue of at least __ percent. No customer above __ percent.] How I will find it [Direct outreach to owners, brokers and advisors, industry associations. Weekly targets: __ outreach messages, __ calls.] How it will be financed [Senior or SBA 7(a) debt, seller note, investor equity.] What I am raising [$__ from __ investors, covering __ months. Salary $__ a year. Budget attached.] What investors receive [Right but not obligation to invest in the acquisition; terms attached.] References [Name, relationship, contact. Name, relationship, contact. Name, relationship, contact.] Why now [One paragraph, honest.]
Questions to ask investors
You are choosing partners for a decade. Ask each investor the questions below, and listen for specifics.
- How many searchers have you backed, and how did those searches end? Can I speak with two of them?
- What do you do when a searcher is stuck at month 12 with no LOI?
- How do you decide whether to invest in an acquisition, and how fast can you move?
- What do you expect from me in updates and calls?
- How have you handled disagreements with a CEO on strategy or pay?
- Will you take a board seat? How much time can you give?
- What would make you walk away from a deal I bring?
How investors evaluate you
Investors rarely publish their criteria, so this list is judgment from how the model works. At the search-capital stage, they underwrite you, so expect questions on the points below.
| What they probe | Why it matters | How to show it |
|---|---|---|
| Leadership and people skills | You will run a company with employees and customers | Concrete stories of leading teams; references who saw you do it |
| Learning speed | You will need to learn a new industry quickly | Examples of mastering a new area in months |
| Resilience | Most of the search is rejection | How you handled a long, hard project |
| Judgment and integrity | You will sign contracts and handle money | References and a clean history |
| Process | A search is a repeatable pipeline | Your weekly targets, tracker and past results |
| Realism about risk | Not every search succeeds | Honest answers on the acquisition rate and what you will do if you fail |
Frequently asked questions
IESE's 2026 data for funds outside the U.S. and Canada shows a median of about $502,000 of search capital in 2024 and 2025, $450,000 for solo searchers. A third-party summary of the Stanford primer puts U.S. figures at roughly $400,000 to $500,000, which you should confirm in the primer.
IESE reports a median of six months to raise outside the U.S. and Canada, up from five. Plan for runway on that scale.
You can, but securities law applies to any offer. Use a lawyer and a proper exemption, and be clear that the money may be lost if no deal is found.
Consider a self-funded search, which relies on your own money, an SBA loan and seller financing, or partner with a more experienced sponsor. See the other guides in this section.
Sources
Last reviewed . General information, not legal, tax or financial advice.
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Related guides
- What is a search fund? The traditional, self-funded and independent sponsor models
- Search fund timeline: from the decision to search to the day you close
- Search fund economics: what the Stanford and IESE data say about returns, risk and who gets paid
- Books, courses and communities for searchers and ETA buyers
- Browse businesses for sale