Last year I listened to Patrick O’Shaughnessy’s interview with Matt Clifford who runs Entrepreneur First, an investment firm that helps people leave their current jobs, find a co-founder, and start a company. I find the model fascinating and have wondered how this strategy could be applied to individuals acquiring companies rather than starting them? What would a potential fund look like?

Right away this sounds like a search investment fund that invests in funded and self-funded searchers. But I wouldn’t call every individual trying to buy a company a “search fund.” I believe there are individual investors looking for companies that don’t fall into the search fund classification. In fact, most probably don’t. I’m still thinking about where the key difference exists, but allow me to share a few examples of folks I think fall outside the search fund model.

These are all opportunities to invest in individuals acquiring their own companies that fall outside the search fund category. The fund wouldn’t be opposed to investing in search funds, it would just have a more open and opportunistic mandate. The spirit of the fund would be similar though. Find driven, creative, and curious entrepreneurs, support and believe in them to find great opportunities, and help them make an acquisition.

Individuals have been buying companies themselves forever, but these entrepreneurs usually raise money within their own investor networks. And since we tend to have the strongest relationships within our local region, they aren’t able to gain geographic diversity in their investments and relationships. A fund that generates its own proprietary deal flow through relationships, a content engine, scout network, and social platforms removes any geographic concentration and opens participants to professionals and investments outside their typical networks.

My thinking is still a work in progress. Here are some questions I’m still thinking about with this model and could use help thinking through.

This is the beginning of my thought process and more similar to notes than a true article. I’d love to hear your thoughts on the idea if you’re willing to share. Is this the dumbest idea you’ve ever heard? Is there an insight I missed? Why will this work or fail spectacularly?

Just send me an email or DM me on Twitter. I’m easy to reach.

Capital Notes

If you found an interesting article, podcast, or interview that I missed, please let me know, I’m always looking for interesting stuff.