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Creating the Search Fund


It goes without saying that starting something amazing starts with the first step. It takes a special person to be able to assemble an amazing team with great organization to accomplish a task that is much bigger than themselves. Elon Musk can't build a rocket by himself, it would take him his entire life. However, by finding the right people and creating the right processes, he is pushing the boundaries of human comprehension.


This has been my dream and what I've studied for the past 20 years. I've always believed in the methodology of creating something large. I've witnessed the successes and failures of many businesses throughout my time in banking. The one trait that sets the successful from the failed is purely the leadership. Leadership has a vision, is able to organize efficiently, and able to get the right people with the right mindset to create huge things. It is similar to an ant colony, whereby the hierarchy is able to create an entire community within days. The hierarchy is committed to the cause and the outcomes are simply amazing.


I've set out on creating this search fund for this reason alone. I want to do amazing things and empower those that are looking for an outlet to do the same. I've found that my experiences and skills align perfectly with every piece of the search fund. From the time I've built networking groups to help in referring deals to one another to my leadership abilities within certain startups I've had. It is almost serendipitous.


So, this is the first blog post of the search fund venture. I am going to document my steps throughout this process, as I am sure others would love to follow suit. To start, I want to warn: I didn't just decide to raise money to buy a business. This has been over 15 years of experience culminating itself into this moment. Allow me to explain in detail.


There are many aspects of the search fund that are essential. Here they are in chronological order:


1. An extensive network of accredited investors: This is something that I have built purely from being in the banking industry over the past 15 years. I've established a network of dozens of people with a large amount of money. This may simply be due to the area I live in, but certainly due to my industry I've been involved with.


2. A clear understanding of how business works: I've been lending to businesses for the past 15 years and have started over a dozen small businesses. Moreover, my entire family are business owners. This isn't just something I decided to get into, I was literally born into it. I was the black sheep by NOT having a business. But, the knowledge I accumulated by working in corporate banking has allowed me experiences that are more than what an MBA would have.


3. An understanding of how to cold call: Working in corporate banking isn't as easy as it sounds. There are many bankers out there trying to get into new businesses. If you don't have a clear strategy around business development, you will be dead in the water before you even start. A search fund will need a clear direction. I've written a primer about this very thing as it relates to corporate banking business development.


4. An understanding of corporate finance: To be clear, you CAN hire a great CFO. However, if you don't know the fundamentals of corporate finance, you won't know what to look at. I consider it essential to know how to read corporate financials. To be able to peak to investors and a board of directors clearly and concisely, you will need to know exactly what to look for and how to regurgitate this information in a simplified way. Not many people know how to do this, including some of your investors. This is why you need to know it.


5. A history of integrity and ethical behavior: This is something that is very important. As said above, I know many people with a lot of money. I've never asked them for any money - Not once! I've seen many startups and have had the ability to pitch them on many investments. However, I didn't. Why? Because if I take someones money, I need to be prepared to give it back to them with a significant payback. You aren't looking to play with other people's money. You are a fiduciary and you need to know exactly what you are doing. Trust goes beyond saying, "trust me". I can't stress this enough.


6. A history of negotiations: To be absolutely crystal clear, there are only four types of outcomes when negotiating; win-win, win-lose, lose-win, lose-lose. If you are the type of person that is looking for win-lose, you might as well stop now. Any business deal that is ever made will need to be win-win. Why? Because bad feelings among business deals are not a good thing for business. If you feel like you are getting away with something, you probably are. That isn't fair. But, the opposite is true. If you feel like you are leaving something on the table, then speak up! It must be a win-win scenario for everyone. Moreover, the negotiations are never ending. From the first conversation with an investor, to the lawyers you'll use, to the accountants, to your middle management... The list is endless. If you aren't good with negotiations, then you need to get more experience in this realm. Unfrotunately, today, there are too many people that feel like it is their way or no way. That may be true on Facebook, but in business, there is no other way than win-win. Otherwise, walk away.


7. An understanding of motivating and driving people: By nature, most people lose focus and drive after awhile. It can be a song, a speech, or something as simple as a movie that builds this energy within someone to do something great. You need to know what lights that fire within someone and use it to the company's advantage.


8. A clear understanding of delegation: You aren't going to run a company as a dictator. You can't know everything and you can't rely on people telling you everything, nor do you want to. As the saying goes, you put your pants on the same way as everyone else. You only have 24 hours in a day. Be prepared not to make decisions about everything and trust your people. You'll need to delegate as much as possible in order for the true successes to happen. The goal is to make it so that everyone knows their marching orders and vision and let them figure out the best way that works for them. You aren't becoming a CEO to dictate. You're becoming a CEO to delegate.


This is a lot to comprehend and a lot to write about. Nonetheless, I am in the early phases of the search fund. I am writing the Private Placement Memo. I'm constructing a pitch deck to accompany it. I also have all of the necessary documents that I would want as an investor. Once all is prepared, I am going to begin the process of reaching out to my network. Mind you, I am not doing this in a vacuum. I have many people looking at what I am writing and opining on it. This includes heads of credit from major banks, executives, CEOs and more. Once created, I will be happy to share them.


Step 1 is all of this: Creating the product to sell. Good luck.

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