A new business model — entrepreneurship through acquisition — is beginning to gain traction in the Indian startup landscape. Known as search funds, they are popular in countries such as the US, Spain, Brazil and Japan, but are now drawing the attention of Indian professionals.
Instead of building a company from scratch, search funds are in the business of buying existing profitable companies. While the model is still nascent in India, early signs point to a growing movement. According to industry sources, there are currently around 10 search funds in India, with three actively searching, three raising capital, and four preparing to begin their capital raise soon.
Anurag Sinha, founder and managing partner, Milestone Search Capital, who has served as the CEO of a profitable mid-sized company and previously led the banquets and weddings vertical at hospitality major Oyo, is among the early adopters of the search fund model in the country. His firm, Milestone Search Capital, is currently in the process of identifying a suitable company to acquire. Under this model, entrepreneurs, known as ‘searchers’, first raise funds from high-networth individuals, institutional investors, or venture capitalists to support the search process. Once a suitable business is found, the entrepreneur acquires it, usually becoming the CEO and taking full charge of operations. The investors then co-own the business alongside the searcher, hoping to benefit from its scaled-up success.
Search funds typically aim to acquire businesses that are already stable, with recurring revenue, strong customer loyalty, and limited capital requirements for growth. According to Vikram Gupta, founder and managing partner at IvyCap Ventures, these parameters make search funds particularly attractive to investors. “VCs prefer models where risks are mitigated. In this case, the business is already at a certain maturity level, with a customer base and functioning team. So, the early-stage risks are largely avoided,” he said.
The model is also drawing interest from seasoned operators like Rehan Netarwala, founder of Okintek Capital. Having built Savage & Palmer, an outsourced accounting firm serving over 500 Indian SMEs, Netarwala was looking for his next move and found search funds to be an ideal convergence of investing and operating. Okintek Capital has raised a `200-crore fund to acquire a high-quality SME and counts among its investors institutional backers, seasoned CEOs, family offices, and global search fund leaders.
For investors, search funds offer a flexible approach. There is no need to commit a fixed cheque from the outset. Instead, they pledge a range, and capital is drawn only once a suitable acquisition is found.
Sinha notes that Milestone is backed by a high-profile group of global investors, including Will Thorndike (author of The Outsiders), Tycen Bundgaard (founder of Lighthaven), and Pawan Danwar (president and CFO of HCL). The firm has reviewed over 50 businesses in the last two months.
The model is also appealing to venture firms. Artha Venture Fund, for example, has announced plans to launch specialised funds targeting search funds and pre-IPO investment opportunities by the third or fourth quarter of FY26.
Beyond the entrepreneurial opportunity, the search fund model presents a structured exit plan for India’s family-run small businesses. Many of these businesses face succession challenges, with younger generations often preferring different career paths. A search fund can step in as a long-term, committed operator that not only preserves but enhances the business.