Search fund-of-funds WayFinder Capital has reached a $10 million first close for its initial fund, WayFinder Searcher Growth Fund ILP.

It is planned that the fund will invest, via search funds, in around 20 strong mid-market Australian private businesses over the next 4-6 years.

The search fund concept, which is relatively new to Australia but established more than 30 years in the US, involves setting up an investment vehicle to back the search for, and acquisition of, a private business of a predetermined profile. Typically, the searchers comprise a key individual investor, and a small group of aligned investors. The key investor will be a potential chief executive of the business to be acquired and will be paid a modest salary to lead the search. The aligned investors are likely to have skills or experience that will contribute to the search, acquisition process or running the business.

When a target for acquisition is identified, the search fund investment vehicle may seek additional investment if needed.

WayFinder is seeking to raise up to $25 million and is conditionally registered with Business Australia as a Venture Capital Limited Partnership (VCLP).

Co-founders and managing directors of WayFinder are M&A professional Lui Pangiarella, business coach Akram Sabbagh and lawyer and accountant Nima Sedaghat, a South Australia-based partner of law firm HWL Ebsworth.