Search funds: a fast track to the boss’s seat?

Posted On May 29, 2014

I was listening to NPR the other morning, and this story came on during the Planet Money segment. It tells of two young Harvard Business School grads who turned down job offers to instead solicit search funds, where investors back individuals in their efforts to search for a new business opportunity. Not very different from a private equity group paying a salary to deal finders, but different enough to take notice. These are young folks, Millennials, with very little business experience. Also, they are not just looking for leads on businesses ready for acquisition; they are looking for businesses to run. The goal is to find a company that needs leadership and step into that role—instant CEO.

At first blush it really sounded like a lot of chutzpah. Then I got to thinking…these guys are getting other people to pay them in the six figures to, essentially, look for a job. It’s like a high class version of living in their parents’ basement. At the same time, they certainly cannot be accused of being lazy. They are ambitious, seeking to leapfrog earned experience and land squarely at the head of the table.

This isn’t chutzpah, it’s classic Millennial with a Harvard degree. Which, okay, is also a little like chutzpah.

The proof, of course, will be in the pudding. The two profiled in this story are not the only ones utilizing this search fund strategy, but the jury is still out on long-term results. Only time will tell if these fresh-out-of-the-box CEOs can be successful without working up the ladder in the traditional fashion.

What do you think?  Are search funds an up and coming trend or an anomaly for the Ivy League set?

Categories: Entrepreneurship, Generation Y / Millennials