SF Investment Class - BetaiCapital.Com

We invest primarily in the Search Fund asset class ("SFI" or “SF Investments”).

What is a Search Fund?

A Search Fund is an entrepreneurial path undertaken by one or two individuals (the “Searcher(s)”) who form an investment vehicle with a small group of aligned investors, some of whom become mentors, in order to search for, acquire, and lead a privately held company for the medium to long term, typically six to ten years. It is an alternative way to become an entrepreneur. Rather than launching a start-up business or purchasing micro-businesses that have a handful of employees and a few hundred thousand dollars in annual profit, Searchers acquire mature, mid-market companies with a history of annual profits exceeding $2 million and mature infrastructure systems operated by seasoned employees.

When successful, this has resulted in a relatively fast path to becoming an owner-CEO, attractive financial returns for both investors and searchers, and growing, well-run enterprises.

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The term “search fund” originated at Harvard Business School in 1984, was popularized at Stanford GSB in the following 10 years, and has spread steadily to business schools and entrepreneurs around the world. A typical search fund progresses through four stages:

Stage One

Raising a search fund, i.e., a pool of capital from a group of aligned, involved investors backing the searcher(s) to find a company to acquire.

Stage Two

Search and acquisition, usually one to two years during which the searcher(s) generate many possibilities in order to identify and acquire an operating business.

Stage Three

Operation, the longest stage, and most compelling for the entrepreneur, during which the searcher(s) lead and grow the business.

Stage Four

Exit, at which point the searcher(s) and investors achieve liquidity by various means including strategic sale, going public and management (searcher) buyout.

For detailed background information on search funds, see the Stanford GSB Center for Entrepreneurial Studies (CES) Search Fund Primer and the IESE note Search Funds — What has made them work?

What is a Search Fund Accelerator?

A Search Fund accelerator is a business accelerator which services entrepreneurs desiring to pursue Entrepreneurship Through Acquisition (“ETA”) as opposed to entrepreneurship through creating a start-up or buying either a franchise or micro-business. It eliminates Search Fund Stage One by bringing entrepreneurs in-house and providing all resources required to effectively execute up to the end of Search Fund Stage Two, including remunerating its entrepreneurs while in-house. In addition to substantive instruction and teachings, it typically provides to Searchers best practices, regular coaching, mentoring, professional network enhancement, partial or sole funding for any suitable acquisitions and other beneficial resources to enhance Searcher success. Upon a successful acquisition by its Searcher the Searcher becomes the CEO of that acquisition and the Search Fund Accelerator, in addition to holding equity in the acquisition, appoints members to the board of directors.

Searchers typically go through a rigorous application and screening process and are accepted into annual cohorts of between 4-10 Searchers. Each cohort has up to 2 years from the date of admission to successfully complete an acquisition. Therefore, these cohorts provide a recurring pipeline of pre-vetted Searcher acquisition investment opportunities.

There are a handful of Search Fund accelerators across the world, with the majority concentrated in the United States. They are predominantly single office, privately-run, for-profit enterprises which benefit from the return on the equity investments they make in the acquisitions of their cohort Searchers. They include BETA-i, SFA, Broadtree Partners, Spur and SME Ventures.

Black Entrepreneurship Through Acquisition Incubator (“BETA-i”)

Black Entrepreneurship Through Acquisition Incubator (”BETA-i”) is a Search Fund Accelerator operating in Canada with licensed branches in the United States. It was the world’s first and only Search Fund Accelerator focusing on Black and BIPOC Searchers. Consequently, as an addendum to the historical Search Fund curriculum, it is the only Search Fund Accelerator to have created and implemented a proprietary curriculum to overcome systemic and other racially engendered barriers encountered by primarily Black or BIPOC entrepreneurs and/or their Search Funds. It is presently expanding its delivery footprint of its proprietary program across Canada and the United States in order to service, where market demand is the highest, Black and BIPOC Searchers locally. This multi-office approach is also unique among Search Fund Accelerators.

The BETA-i cohorts resulting from its various branch locations provide a recurring pipeline of prevetted Black and BIPOC led acquisition opportunities. Through its stakeholder, mentors and branch network it creates an ecosystem which aspiring and existing Black and BIPOC entrepreneurs can leverage to enhance entrepreneurial success in both the acquisition, operation and exit stages.