Democratizing Entrepreneurial Finance: The Case for a Secondary Market

This thesis explores the landscape of search funds, a niche yet increasingly popular investment model that enables aspiring entrepreneurs to acquire and manage small to medium-sized enterprises (SMEs) with the backing of experienced investors. Originally conceptualized at Stanford University in the 1980s, search funds have gained global traction due to their ability to combine entrepreneurial ambition with private capital in a structured, risk-sharing framework. It provides a comprehensive overview of the search fund lifecycle, highlighting its unique position between private equity (PE) and venture capital (VC). Unlike traditional PE or VC, search funds focus on lower mid-market companies with stable cash flows and growth potential, often overlooked by larger financial players. The research emphasizes the operational involvement of the entrepreneur, who transitions into the CEO role post-acquisition, aligning incentives with investors through a performance-based equity model. Particular attention is given to the European context, where demographic shifts and succession challenges in family-owned SMEs create fertile ground for the search fund model. The thesis also investigates the emergence of partnerships, gender imbalances among searchers, and the educational and professional backgrounds that define successful operators. The core contribution of this work lies in analyzing two innovative proposals aimed at enhancing the scalability and liquidity of the search fund ecosystem: the development of a secondary market for search fund shares, and the creation of European private debt fund. Through surveys and insights, the thesis demonstrates strong investor interest in liquidity solutions and highlights the untapped potential of retail participation in this asset class via regulated market access, such as Euronext Access. Institutional support, particularly from the EU, could unlock significant economic and social value by preserving businesses threatened by generational transitions. By reducing acquisition financing costs and providing clearer exit paths, such interventions could democratize entrepreneurial finance, stabilize employment, and secure tax revenues across the continent. Ultimately, this thesis positions search funds not only as a high-return alternative investment, but also as a tool for addressing systemic challenges in SME succession and economic continuity. It calls for greater integration of search funds into public capital markets and policy frameworks, supporting their maturation into a globally recognized asset class with broad-based impact.