This study investigates how international search fund (SF) entrepreneurs in nascent markets mobilize financial and human capital, with a particular focus on the role of social capital in their fundraising efforts.
The study employs an inductive, qualitative approach, drawing on 26 semi-structured interviews with SF entrepreneurs from 16 nascent SF markets. The analysis is supplemented by archival materials and expert interviews with formal SF investors for both validation and triangulation purposes.
The study reveals a two-stage fundraising process where local informal investors provide initial funding and credibility, enabling entrepreneurs to attract formal international SF investors with specialized expertise. In doing so, SF entrepreneurs aim for the mobilization of complementary resources from these investor groups. Social capital plays a key role in facilitating this process by signaling credibility to foreign investors.
This research contributes to the RBV literature by examining how search fund entrepreneurs in nascent markets leverage social capital through a two-staged fundraising process to secure complementary resources from local and international investors for establishing their search funds. The study’s qualitative nature limits generalizability but offers rich, contextual insights. Further research could quantitatively test the generalizability of these findings across different markets.
Entrepreneurs in nascent SF markets are recommended to leverage local social networks and informal investors to increase credibility and attract international investment.
This study contributes to the theory and practice of entrepreneurship-through-acquisition (ETA) by emphasizing the critical role of social and local investor capital in resource mobilization. It also extends the resource-based view (RBV) into the context of nascent SF markets.
