The First Steps to a Family Holdco

We had a lot of rejections, a lot of no from European based investors. It's not an easy model to replicate but it took a lot of persistence I guess and knocking on doors to get to what we actually want which is majority stake in our business.

I would add to that we don't have a template all also for ourselves. It's again it's very deal by deal. It's just kind of what do we think when we look at the business?

If, if you just want to raise money very quickly you can, you can, that's kind of the, you go with the standard traditional search structure and then you'll, you'll be able to raise capital very quickly. But if, if you want to do something differently, you need to really have a thesis, know what you want to do with the business, why it's going to work, why you're credible, who else is in the boat…

So that took us some time and also again, why we're very deliberate about how we're thinking about our search and what businesses we end up wanting to buy.

Sorry, I forgot to mention that we aim to get our investors on the base case, 30 to 35% IRR, similar to kind of that search fund benchmark, and in the downside case, kind of 15% IRR two times mom. And so that's kind of our pitch to investors and some investors are keen to go on board.

But what we found with UK and European investors is that regardless of the economics, whether it's 35% IRR or even 50% IRR, they still pretty much hung up on the idea of investors owning majority stake in the business versus searchers owning majority stake in the business.

Why do you think that is? Just because it's what they're used to or is it a governance and control thing?

It's pretty much, I would say it's more conservative market. They tend to focus more on capital preservation than kind of the upside.

I will say we've found that fundamentally speaking to individuals who worked in venture capital is easier than speaking to those that worked in private equity. So if you're, in terms of like, if you're doing outreach to wealthy individuals, you can go to people who were, who themselves are entrepreneurs or who themselves did a search there. You would find, I think those who did a search…

So somebody who did a traditional search just wants to invest in traditional searchers and vice versa. Or maybe somebody who did self funded might be open to both. But on sort of others in the finance industry, private equity is very, very hung up on sort of 20, 20, 30% ownership because it's how they think about the world and heavy control in governance, lots of reporting requirements, et…

Venture capital is more, well, you know, it's a portfolio approach. I'm going to do, you know, 20 of these search bets and some of them will work out great and maybe some are duds, but it's a slightly different mindset in the type of person. So being mindful of who are you speaking to.