We’re witnessing a clear shift in how investors choose to deploy capital: From traditional fund commitments to deal-by-deal investing. Why is that a good thing for Search Funds?
Why Deal-by-Deal Investing is Gaining Ground — and Why It Matters for Search Funds
Investors are moving away from fund commitments when deploying capital in search funds: Nowadays “Deal-by-Deal” investing is favoured.
Here’s why this trend is resonating — and what it means for investors and entrepreneurs alike:
Selective Engagement, Greater Control
Deal-by-deal structures let investors choose exactly which opportunities to back — no blind pool, no “pay first, see later.” You decide based on deal quality, sector, valuation and strategic fit.
Alignment with Outcomes
Investors can evaluate each opportunity on its own merits, and deploy capital only where they see strong fundamentals and alignment with their own thesis. This inherently drives better negotiating positions and tighter alignment with founders.
Capital Efficiency
Compare this to traditional fund commitments, where capital is locked up over long periods on an upfront basis. Deal-by-deal keeps dry powder available — so you can be nimble, opportunistic and disciplined.
Access to High-Quality Search Opportunities
Search funds and similar models generate curated dealflow — often in fragmented, highly resilient segments of the market. With a deal-by-deal approach, investors gain targeted exposure without broad long-term commitments.
Stronger Investor-Entrepreneur Alignment
By investing alongside founders on specific deals, investors build deeper relationships with CEOs and operating partners — accelerating value creation and fostering shared success over the long haul.
As more investors prioritize flexibility, selectivity and direct involvement, deal-by-deal continues to emerge as a compelling alternative to traditional fund commitments — especially in markets where entrepreneurial leadership and operational expertise drive returns.