How many of you search funders actually generate real cash?
Was at a ETA event the other day and all these big ego dudes thought they were crushing it making 200k sde with sba risk xyz. In my social media biz i get like 70% net on 410k top line last year and I am the poorest of my online friends.
Are any of you actually stacking a portfolio of multiple llm companies or is hiring ops/ceo an unfeasible bottleneck for most ppl scaling?
Based on the most helpful WSO content, search funds typically target businesses with $2M+ EBITDA and $15M+ revenue, aiming to buy, improve, and exit them. While some search funders achieve significant success, such as leveraging favorable debt terms and achieving high returns, not all generate substantial cash flow or scale to a portfolio of multiple companies.
The bottleneck for scaling often lies in hiring operational talent or CEOs to manage these businesses effectively. Many search funders operate as owner-operators, which can limit their ability to scale beyond one or two companies. Additionally, while the average IRR for search funds since inception is reported to be 35%+, not all achieve this, and some may struggle with the operational and financial risks involved, such as SBA loans or other leveraged structures.
In contrast, your social media business's 70% net margin on $410K top-line revenue is impressive, especially given the lean operational model typical of online businesses. It highlights the difference in scalability and profitability between traditional search fund models and modern online ventures.
Sources: Point of a Search Fund?, Starting A Search Fund (Micro PE Firm), Miserable in consulting, how to improve situation?, Q&A: I’ve held Pre-MBA MM LBO, Growth Equity and Venture Capital investment roles for funds with $500M+ AUM to $5B+ AUM, Search fund model vs Sponsorless PE Fund
Search fund is barely PE. What you make is less than a 24 year old first year Associate
yeah bc i am 24, genius. Side thing combined with 180k base 10-20h/wk REMOTE w2. And have traveled the world the whole time. But let me guess ur numbers bigger. Congrats Hows the hairline
U ever operate/generate a dollar of ebitda in ur life bud? Or at my age? Man I pray im not on wso at vp age
Keep throwing ms from ur 5k/mo nyc shoebox bud. Can smell the rogaine thru my phone
Well u kept msing anyway instead of responding. Its nearly 10p here you should go to bed! If they let you!
I myself am going to get some beauty sleep before my 10am mouse jiggler walk
Search funds aren't a cashflow play. These guys bet on the exit
Obviously eventually but all the normies who fall for paying for business school and do search have debt to pay and cant stop talking about “SDE” and what number is equivalent to their pay. If anything they get caught holding bag and nobody wants to buy the cleveland laundrymat they levered up on sba debt
Most traditional search funds are failing to deploy and closing up shop. SPVs are a different animal, but I’m referring to traditional (often post-MBA) search.
The market is over-saturated following an influx of search (partly driven by soft post-MBA hiring market) and fragmenting PE market (SPVs and spin-offs/first time funds).
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