The Wall Street Journal profiles a growing trend: MBA graduates raising search funds to buy a business instead of starting one.
- A growing number of MBA graduates are pitching investors on themselves rather than a startup idea
- Through the search fund model, an entrepreneur raises roughly $400,000–$500,000 from a small group of backers to cover two years of salary and expenses while hunting for a business to buy
- If the search succeeds, the same investors typically fund the acquisition, and the searcher steps in as CEO with a meaningful equity stake earned over time
- First developed at Stanford and Harvard business schools in the 1980s, “entrepreneurship through acquisition” is picking up steam again as MBAs look for a faster, lower-risk route to running a company