Why Hockey Sticks Break
The article warns that high‑growth businesses can break the search‑fund model. Rapid revenue expansion forces new CEOs to make large, irreversible decisions before they understand the business, while premium entry multiples inflate equity needs and required EBITDA growth rates. Debt is capped to trailing cash flow, limiting leverage and raising the hurdle to achieve the typical 35% IRR. Ultimately, operators must scrutinize the durability of growth and the quality of recurring revenue before paying a premium.
How to Sequence Your Search Raise Investor Conversations
The article argues that the order of investor conversations is crucial when raising a search fund. Early meetings should be with people who already know the entrepreneur, allowing the founder to practice the pitch and secure soft commitments that act...