This 2025 INSEAD Knowledge piece explains why search funds are gaining traction as an alternative to traditional private equity and venture capital.
- Written by INSEAD Knowledge professors I. Naumovska and G. I. Zañartu (2025)
- Explores why search funds are drawing more attention as an alternative to PE and VC, especially with VC facing depressed valuations and a slower exit market
- Target profile: profitable, owner-operated SMEs (roughly $1–5m EBITDA), too small for PE and too mature for VC
- Two-stage structure — fund the search first, decide on the acquisition later — lets investors assess the searcher and target before committing more capital
- Argues this gives search funds more investor control and lower volatility than a typical VC bet on an unproven startup