Pioneered by the Stanford Graduate School of Business, Search Funds enable entrepreneurs to find, acquire and grow existing yet stable SMEs into high performing businesses.
A Search Fund is an investment model where an entrepreneur raises initial capital to identify, acquire, and operate one established SME, often as its new CEO. Moonbase supports this journey from start to finish: fundraising, search, acquisition, and growth.
Your mission: bring together a small group of committed investors who will back your search and support you throughout the journey.
Forming a Search Fund starts by raising capital from 10–15 trusted investors who become long-term partners in your venture. They typically provide between 300.000 and 500.000 EUR to finance the 12–24 month search phase, covering your salary and operating costs.
The investors hold the right of first refusal when the time comes to fund the acquisition.
We leverage our market leading knowledge of SMEs to identify those with the greatest potential to take them to the next level of growth.
Your mission: find one suitable SME and convince the owner to sell it to you.
The 2018 Stanford Search Fund Study shows that 69% of Search Funds acquire a company. The criteria below will help you find the right opportunity:
· Simple operations and motivated seller
· High EBITDA Margins (> 15%)
· Recurring Revenue
· Low customer concentration
· At least 3 years of profits and growth
· EBITDA of at least €1m (€1-5m target)
· Low Capex needs
· Fragmented Industry with tailwinds
A potential risk for the entrepreneur is to acquire a company that does not have the right foundations to enable future success. Our role at Moonbase Capital is to help you navigate this crucial phase, providing you with experience and insights we gained as CEOs in multiple SMEs.
When the time for acquisition comes, each investor can use their pro-rata right of first refusal. Some situations might suggest other financial tools such as seller or bank debt to cover up to 70% of the purchase price. Typically, companies are acquired at fair market value for €10-30 million.
This is where your exciting journey as CEO begins. The first step is to familiarise with the business, the people and the operations within the first 6-18 months. Once at ease with your new role, you’ll feel comfortable bringing the right actions to unleash growth and overall improvements. Your close team of investors will support you from your first steps as CEO up to your strategic choices as seasoned business leader. This is where the core value proposition of Moonbase Capital lies – in all phases of the process, searchers are guided by our advisory board, and our partners – a perfect balance of best-in-class support and autonomy.
When growth targets have been achieved – usually between 3 to 6 years – the team exits and returns are delivered. In this stage Moonbase Capital can support you again with our M&A experience and our advisory board. This can be instrumental in finding potential buyers, and in helping you structure your exit. While not typically the case, some CEOs opt to stay onboard long after the exit phase, and opt to lead their new company into the future.
Download our white paper for a clear overview of the model, its performance, and why it is gaining relevance in the SME landscape.
Search Funds create a unique alignment of interests: entrepreneurs become long-term leaders, investors gain access to high-quality SMEs, and business owners ensure their legacy continues.
It’s a model built on partnership, discipline, and enduring value creation.
Each Search Fund brings together four key players: the entrepreneur, the investors, the seller, and the company itself.
We invest in the best entrepreneurial talents and provide dedicated support and mentorship throughout their Search Fund journey. Find out more about who they are.
