How to Find Success at Research Fund Launches

The opinions expressed by entrepreneurs contributors are their own.

Research funds have begun to turn the tide on generalists winning in a largely specialized business environment. Honors thesis efforts have recently proven more successful than the opportunistic approach, as found in Stanford's 2020 research fund study, "Researchers who focus their research, development and adherence to a systematic approach to creating deal flow and analyzing deal opportunities, have a greater likelihood of identifying and closing an acquisition."

While inspiration for a thesis and industry vertical may be evident based on the researcher's passions and past experience, finding a company that fits the research mold can often be difficult.

Related: Fundraising: What You Need to Know About This Investment Model

However, the upside is that value chains in almost every industry are teeming with opportunities that fit the pattern. These are the hidden gems. This means, for example, if the goal is to serve as an operator in the health care supplement industry (from the knowledge acquired over the years as a professional athlete), an operation that manufactures or provides a certain ingredient that goes into the final product, as opposed to the final product being sold to consumers, would be an ideal opportunity.

This “value chain-based search” approach also offers flexibility geographically. Running a geographically agnostic search while expanding the pool of potential targets may not be viable for most searchers. Compensating for this with more companies within a sector keeps the network broad while respecting the researcher's mandate.

While necessary from the outset, alignment with the entire capitalization table on a thesis (and geography) and continuous feedback throughout the process unlocks the resources that come from a large experienced team and from the view of several researchers and transactions from an investor's perspective - the successful, the break-evens and those that did not. The most valuable resource is a playbook, whether in the form of a time commitment or exclusive documentation conducive to successful research.

Related: Research Funds: A Financing Option for Business Buyers

Whoever said "it takes a village" first was probably a researcher. Building a team that is unequivocally committed to the vision and believes in the mission is crucial to the researcher's experience as a pre-CEO leader, as well as their chances of landing a hidden gem in a company. Most researchers achieve this through interns, whether undergraduates or business school students, looking for an appetizer for .

While the more the better through opportunity hunting and seeking out opportunities in the data room, a key factor is the governance of the fund. Karl Scheer, now CIO of the University of Cincinnati, was clear in his remarks on governance: "You can't make investments successful with a bad governance structure."

Although on a very different scale, the same principles apply for aligning incentives and what a potential intern or research fund fellow can get for their time and effort. Additionally, the decision to build a remote or in-person team in 2022 remains a personal preference. This may change with a clearer answer as work dynamics continue to be tested and studied over the next few years.

Another important set of people to have in a seeker's arsenal is a set of mentors who celebrate your success with unbiased advice - advisors,...