A simple calculator for the search fund risk/return profile
I built an open calculator that simulates a multi-decade search fund portfolio based on the Stanford Search Fund Study assumptions. Use it to play with the math.
I've always been fascinated by the unique risk/reward profile of entrepreneurship through acquisition. Unlike tech startups, ETA doesn't require chasing unicorn-level growth to generate solid returns. It's about buying and operating stable, cash-flowing small businesses, often with the chance to create life-changing wealth.
So I built a small calculator. It's inspired by the Stanford Search Fund Study, which highlights an average IRR over 30% and 5–8× returns on successful exits.
How it works: the calculator assumes you invest a portion of post-tax income into one small business acquisition per year, and lets you simulate portfolio growth, accounting for potential exits. The simplicity is intentional — it's not here to replace deep due diligence. It's here to help you visualize the power of ETA investing as an annual habit.
Limitations to keep in mind. No future exits modeled — once an investment exits, the calculator doesn't simulate reinvesting that capital, so portfolio values are conservative. Annual investing only — it assumes a gradual, consistent approach. High-level assumptions — real-world deals involve a lot of nuance.
Despite these limits, it's a fun way to explore what getting into ETA might look like over time. Whether you're investing in roll-ups, micro-acquisitions, or helping searchers fund their dreams, the journey is about making bets on incredible SMB operators and the businesses they scale.
For me, it's the balance. ETA offers a blend of moderate risk with potentially significant upside. It's not just about financial returns. There's something rewarding about backing real-world businesses, creating jobs, and driving impact in local communities.