SFA offers outstanding economics
SFA’s economics are notably superior to those offered in the traditional search fund model and by other incubators. Compared to other funded search models, SFA offers:
Better deal terms for searchers & CEOs
Vastly greater resources, coaching & support
Dramatically greater chances for success
Higher expected financial gains
In addition, our searchers are backed by a fund of committed capital, raised specifically for their cohort, that allows them to buy companies without the uncertainty of disruptive fundraising delays. SFA provides 100% of the equity for each of our searchers’ transactions.
A note to self-funded searchers
How do SFA’s economics compare to a self-funded search? The self-funded model can be an outstanding option for searchers who 1) want to live in a particular geography or 2) can fund an acquisition with personal or family resources. However, searchers who plan or need to raise capital from outside investors should think carefully about the trade-offs that self-funding entails.
Will you have access to engaged mentors during the search?
Will the goal of having majority control result in you buying a company that is too small to ensure stability?
Will you have to make a personal guarantee to secure debt financing?
Will you have access to a strong set of mentors when you are evaluating an investment decision?
SFA’s economic model puts searchers first
We created SFA to help searchers succeed. Since searchers are the cornerstone of our organization, we also made searcher financial outcomes a central tenant of our model. As successful entrepreneurs, we believe in making money the old-fashioned way: we earn it.
The only way the SFA team makes money is if our investors make money. And the only way our investors make money is if our CEOs make money. Therefore, we put all our effort into helping our searchers and CEOs succeed. It’s as simple as that! No search fund investor is more incentivized to help its CEOs succeed than SFA.
The Common Fund
SFA’s CEOs benefit from participating in their cohort’s Common Fund. In exchange for a small portion of equity in their business, each searcher gets an equivalent share in the businesses acquired by the other members of their cohort. The benefits to our CEOs are two-fold:
Creates an economic incentive for cohort members to help one another as CEOs
Diversifies each CEO’s investment