Subscribe to unlock this article
Thanks for your support.
Funded Ventures, a small investment firm and family office active in the SF and EtA space, was founded in 2017 by lawyer, investor, and advisor Brian Wolfe. Wolfe currently serves as an M&A partner at a leading international law firm, and previously co-founded and co-led SearchWorks, formed in partnership with Mike Ciaglia to acquire SaaS companies in the SEO martech space. Wolfe and Ciaglia grew the platform organically and via M&A and ultimately successfully exited to Alpine Investors. Wolfe also serves on the Board of Advisors at NextGen Growth Partners, a Chicago-based EtA accelerator, and teaches an MBA course on search funds and EtA at Washington University in St. Louis.
Following success investing in both self-funded and traditional EtA search, Funded tapped Max Kleeman and Drake Hill, two of Wolfe’s former students at Wash U, to partner on parallel self-funded searches focused on the Midwest. Funded operates like an accelerator with a very limited number of searchers, and works closely with Kleeman and Hill to source target companies and ultimately, to close acquisitions. Unlike the traditional SF model, both entrepreneurs are looking for the “job of their life” and will benefit from a long-time horizon to run their companies. The playbook is: (1) first, make an anchor investment with at least $1M in EBITDA (and $5-10M of enterprise value); (2) then spend 12 months developing operational excellence in their respective industries and implement systems and processes to enable efficient “bolt on” M&A; and (3) then work with the Funded team to develop an M&A pipeline, with the ultimate goal to grow their respective platforms — organically and via M&A — to $10M of EBITDA. Importantly, Kleeman and Hill will own a majority of the anchor businesses they each acquire, with Funded owning the rest, and Funded has also provided a “soft” equity commitment to fund the add-ons.
Kleeman and Hill are targeting businesses with recurring revenue, low customer concentration, and low CapEx. Hill’s focus is primarily industry-agnostic with a regional emphasis on the Midwest, while Kleeman is more interested in service-based, property services, and healthcare services SMEs. They are utilizing interns and combining proprietary outreach with brokered deals. Currently, Hill is studying for the bar exam and has been concentrating on setting himself up and studying different kinds of industries. Kleeman has reached out to over 1,000 SMEs in the past six months and has already submitted two LOIs.
For both Kleeman and Hill, the main benefits of the partnership with Funded – which they expect (unlike a traditional search) will continue for a significant portion of their business careers – include combining youthful operational energy with veteran deal-making experience, capacity and flexibility to handle multiple acquisitions, and a willingness to engage in smaller deals often outside the purview of private equity.
