How much money should a search fund raise in 2023 for a traditional 2-year search? And how should that money be budgeted? In this article, I report the answers to those questions from over 20 search fund operators and investors. Here’s what they had to say:

$400k is the bare minimum

“Back in 2018 it was 300-400k for a solo searcher. [$500-600k] seem high. The key is building confidence and using templates in expensive processes like legal and diligence to reduce dead deal costs. I wouldn’t spend much on CRM and search tools — you can do most of that yourself or have tools given to you from investors.”

Reagan

“I have recently started to budget my search and am running into $430k as a minimum. This does include savings on rent and generally a low cost of living. I think [$500k] is a fair [number].”

Mohammad

Inflation has raised the average above $500k

“Inflation does push up [the raise amount] a little bit. I would say $550k is a fair number for 2 years search. I budgeted 1/3 of the cost to Legal and DD, 1/4 of the cost to search tools and brokers… It really depends on the industry [though].”

Raymond

Budget at least 1/3 of money raised for legal, due diligence, tools, and brokers

“For [legal, diligence, search tools, and brokers], I would allocate $100K for due diligence and $50K for search tools, and brokers. We could easily say this category forms at least 1/3 of the total expense among other planned/ unplanned events.”

Virbahu

Create a budget

One searcher named Bhushan provided his detailed 2-year, $600k ($300k/year) budget for his search fund:

Category	Year 1	Year 2	Total	Total (%)
Salary	$150k	$150k	$300k	50%
Benefits & Insurance	$15k	$15k	$30k	5%
Legal	$15k	$15k	$30k	5%
CRM, interns, and licenses	$50k	$30k	$80k	13%
Travel & conferences	$30k	$30k	$60k	10%
Diligence	$40k	$60k	$100k	17%
Total Budget	$300k	$300k	$600k	100%

“Bhushan’s calculation is a safe bet, excluding the cost of acquisition. But in most cases such luxury may not be possible and you can probably manage with about $400k by being very careful on where you spend and with your reduced compensation.”

Damodar

“I will likely be around the $550-$575K range, but may have lower travel expenses than most as I will have slight bias to the east coast. Not exactly the same breakdown as Bhushan but close enough that I would point you to [his numbers].”

Ferdinand Chan

Budget accuracy is better than budget precision

“Your goal should be to be accurate, not overly precise. You can raise up to $600K without encountering significant pushbacks. Raising more funds doesn’t necessarily mean you need it, but in my experience, it’s more correlated with the opportunity costs of another job. Compensation: Aim for a salary around the latest Stanford study average: $120,000. “The range of annual salaries during the search phase was $30,000 to $200,000, with a median of $120,000 (and mean of $116,508) and no bonus.” – Stanford 2020 Search Study

Tech Stack- Here is what you will need:

Systematic Data Tools: Grata (~$1000 per month, seek discounts).

CRM & Marketing Automation: Streak (Free for one user), consider alternatives like Reply.io, HubSpot, Outreach.io.

Website Domain: Google sites (~$7 per month).

VoIP Phone: RingCentral (~$50 per month).

Deal Aggregation: Axial (Free, with a success fee based on Lehman formula if the deal closes).

Incorporation Fees: Allocate around $20K to $30K.

Accounting QoE: You need to budget $24k, $8K for broken deals and $12K to $18K if the deal closes. You will budget for 3 broken deals. (Shop around before you choose who you work with)

Legal Fees: Budget zero, most search fund lawyers roll their fees forward. (Less room to shop around).

Travel Expenses: Can vary, considering flights, hotels, dining, and entertainment as needed for your specific activity.”

Michael Tabet

Build the budget based on need, not on the max that will get approved by your investors

“I would recommend building the budget you need, not the budget you think will get approval. For established traditional search fund investors, my $500k budget has been perceived as being on the tighter side. I live in a cheaper city, have a second household income and assets, so the modest salary is not a problem for me. I have spent a lot of time before my search preparing, so feel confident that I can manage within the constraints I have set. The main risk for my budget will be the travel budget with flights looking like they will stay inflated for at least 12 more months. There may be additional paid tools for proprietary search that I may pass over, but over the past six months with a bit of experimentation I have now developed a system for building lists from scratch with free and cheaper tools that works well for me.”

Ben Page

“I agree with those saying to determine raise amount based on budget. Salary, set up costs, travel, diligence, intern costs – year 1 then year 2. Search capital is expensive capital so you don’t want to raise more than you need.”

Alexander Wallace

“$500k was standard in 2022 and is more than adequate. If you run out of capital towards the end but have a solid deal under LOI, I’m sure your investors would assist you in a smaller re-raise to get you to close.”

Doug

Graduating from a good school helps you raise more

“I know what a bunch of people from Kellogg budgeted this year and the range was $500-$600k skewed a little bit toward the high end of that range.”

Brett

Mid-career search fund operators get paid more than fresh MBA grads

“I just closed in June – it was $670k all-in. My salary was higher than average because I’m mid-career and live in the bay area. Investors want the salary to feel tight but not be a source of severe stress. For the costs you asked about:

Legal – I only budgeted $5k. My law firm charges $5k up front and all legal costs are rolled into the transaction (including any broken deal costs)

Diligence – mostly QoE (which, unlike legal, must be paid immediately if there’s a broken deal). I budgeted $30k / year.

Search Tools – I budgeted $30k / year for “search infrastructure” (software, paid interns)

Brokers – I didn’t budget for this – would be paid for in the deal costs”

Chris

How much should a European search fund raise?

“[In Europe] it is above EUR 650k. Roughly the distribution works as follows 40% salary, 20% DD, 40% other expenses…”

Michael

“My opinion, at least for Europe is that at least 600k€ are needed for 2 years search.”

Valerio

How much should a Brazilian search fund raise?

“In Brazil it might be lower than US, I have seen a range of 420k – 460k for a solo searcher.”

Everton