Welcome to The Pocket Fund Edition — and a big shout out to the 88 new subscribers this week! (I had 100 before so this is a big increase lol.)
Sorry about the month-long break. Fortunately, when you work for yourself, you can do whatever you want to. I was working on a lot and needed to take a break to focus on the businesses. I have many exciting things coming and we’ll be back to regular programming this week onwards. I’ve been waiting a while to write this edition — let’s get right into it.
What Is Pocket Fund?
Pocket Fund is a student-led acquisition fund. It began in October 2023 as a $5,000 search fund for buying small online businesses, running each for 12–18 months, and selling at a targeted 5x valuation. The model later grew into Kautilya.
Pocket Fund is a home for a new kind of entrepreneur — where success isn’t defined by how much VC funding you raise.
Pocket Fund will start with a focus on acquisition entrepreneurship with a $5,000 search fund for small online businesses. The first chapter of Pocket Fund will operate as a club out of Claremont McKenna College.
Money isn’t the motivating factor here. Do it for the love of entrepreneurship.
Pocket Fund vs a Traditional Search Fund
| Pocket Fund (2023) | Traditional search fund | |
|---|---|---|
| Capital | $5,000 target ($4,000 raised at the time of writing) | Search capital from investors, then acquisition capital |
| Target | Online businesses under $5,000 | One established company to run as CEO |
| Plan | Buy, run 12–18 months, sell at 5x, repeat | Search, acquire, operate long term |
The figures in the Pocket Fund column are from this October 2023 edition. For the traditional model, read what a search fund is; for what happened next, see Pocket Deals and how to find acquisition capital. The Stanford GSB publishes the reference research on traditional search funds in its Search Fund Study.
The Simple 3-Step Plan
The model is deliberately simple:
- 1. Find & buy a business on Acquire.com
- 2. Run the business for 12–18 months
- 3. Sell at a 5x valuation
- Bonus: Repeat
Pocket Fund has been started to combat what I feel is a lack of recognition given to student entrepreneurs who aren’t looking to raise millions to found a ‘moonshot’ startup. Entrepreneurs who are just looking to follow their passions, start their own businesses, and define success in their own way.
Pocket Fund is committed to open-source practices — all activities and learnings are shared openly with members and the broader community.
What Kind of Business Will We Buy?
- Online business for <$5,000
- Solving a niche problem with little direct competition
- Focus on finding untapped potential
- Takes advantage of the existing strengths of members
- Bootstrapped, run with an eye on profitability and sustainable growth — focus on systems and automation
We believe in growing a healthy and profitable business and are not trying to raise money for a moonshot start-up.
Why Us?
We aren’t entirely sure how — that’s kind of the fun of it. If we knew exactly what to do, then what’s the point? But here’s some success I’ve had in the past:
- Built a side hustle to $25,000 at age 18
- Acquired Sourcely.ai for $4,000, grew it to a valuation of $100K in 3 months
Future Plans
We’re only just getting started. We plan to open chapters in colleges across the US with a focus on recruiting genuine leaders, rather than school prestige.
Where we’re at right now: raised $4,000 out of the $5,000 goal.
Pocket Fund: Frequently Asked Questions
What is Pocket Fund?
Pocket Fund is a student-led acquisition fund that began in October 2023 as a $5,000 search fund for buying small online businesses. The plan: buy a business on Acquire.com, run it for 12-18 months, then sell it at a targeted 5x valuation.
How is Pocket Fund different from a traditional search fund?
A traditional search fund raises search capital from investors to fund a full-time hunt for one company to run. Pocket Fund started with a $5,000 pool aimed at small online businesses, run by students alongside their studies, and repeats the buy-run-sell cycle.
What kind of businesses did Pocket Fund plan to buy?
Online businesses priced under $5,000 that solve a niche problem with little direct competition, fit the members' skills, and can be run profitably with systems and automation.
What happened to Pocket Fund?
The model grew into Kautilya, a buy-side M&A advisory firm, and the Pocket Fund name lives on in the Pocket Fund holding company (pocket-fund.com), which buys and runs small digital businesses.