Search funds have seen significant growth over the past two years, benefiting both investors and entrepreneurs known as searchers. This growth is highlighted in the recent biennial study by the Center for Entrepreneurial Studies at Stanford Graduate School of Business, which monitors search fund activities. Search funds, which allow entrepreneurs to secure funding and mentorship to acquire and manage privately held companies, were first conceptualized by Stanford GSB professor H. Irving Grousbeck in 1984.

To date, over 500 search funds have been launched in the United States and Canada, facilitating nearly $10 billion in investor returns. The years 2020 and 2021 marked a peak in investments, with search funds attracting a record $776 million.  The financial implications of search funds have solidified their place as a viable investment option, demonstrating substantial capital involvement.

The success of search funds is generally evaluated by two main metrics: acquisition rates and return on investment. Since 2014, an impressive 60% of search funds have successfully acquired a company, underscoring their effectiveness in executing business acquisitions. This trend shows a growing confidence in the model and its capability to identify and acquire viable business opportunities.

The return on investment from search funds is also notable, with 73% yielding positive returns since 1986. This statistic reinforces the notion that search funds can be a profitable investment choice for backers. The historical success rates associated with search funds not only provide assurance to investors but also enhance the credibility of the search fund model within the entrepreneurial landscape.

The growing trend and favorable returns associated with search funds indicate a promising future for this investment vehicle. As more entrepreneurs and investors recognize the potential of search funds, it is likely that the number of search funds and the capital invested will continue to rise. This evolution showcases the adaptability of entrepreneurial financing options in today's market, appealing to a broader audience of both entrepreneurs and investors.

Reference: https://www.gsb.stanford.edu/insights/search-funds-show-strong-performance-acquisitions-returns