How one woman is changing the entrepreneurship game in Brazil.

Q&A with Lysandra Alves

While recognition for the search fund entrepreneur has been growing steadily in the US for the past few decades, the practice of entrepreneurs raising money to buy a company as opposed to starting a company of their own is still in the extremely early stages in other parts of the world, including Brazil.

One of the first active Brazilian searchers and one of only a few female searchers in the world is Lysandra Alves of Meissa Capital. Alves grew up in Juiz de Fora, a small town in the southeastern region of Brazil, later moving to São Paulo, where she received her college degree in aeronautical mechanical engineering at the Instituto Tecnológico de Aeronáutica. After college, she traveled to the US to attend Chicago Booth where she completed her MBA in 2015, and has since returned to Brazil to begin her search fund, Meissa Capital.

Alves has completed her fund and is actively searching for a Brazilian business to acquire. The Polsky Center spoke with Alves to help share her story, struggles, and motivations with others who might see a bit of themselves in her journey.

Polsky Center: What attracted you most to a career in search funds? When were you first exposed to the idea?

Lysandra Alves: My main goal while completing my MBA was to become an entrepreneur and figure out what kind of endeavor would have the best fit with my skills and passions. While at Booth, I started an education startup, Innovatrium, and did very well in a variety of startup and pitch competitions. But, eventually we ran out of money before becoming successful.

In parallel, I had learned about search funds at a Search Fund 101 lecture promoted by the school during my first year at Booth, and the concept dazed me. At the time, I figured, if I could just form the fund, it would be a perfect fit. So, I decided to test it out, (I believe one of the most valuable assets coming from an MBA is the possibility to test out different things) and I got a second summer job at Raptor Technologies, a search fund acquired company in Houston, TX. I had a great time working with Jim Vesterman, CEO of Raptor, but I also used my time there to network with other searchers and ask Jim all the important questions I needed to know about the different steps to raising a search fund. By the end of the summer, when I was able to compare each of my different entrepreneurial experiences, I felt like I had found a better fit with ETA (entrepreneurship through acquisition).

I learned that I was just OK at starting a new business, but that I could be really great at growing an existing one.

Polsky: How do you think your previous work experience (sales, consulting) helped you transition to a search fund?

Alves: Before attending Booth, I managed a team of 15 people. I was a national sales manager at Vivareal and a city manager at Groupon. Besides sales, my job encompassed marketing, operations support, strategic planning and HR. And, before Groupon, I worked as a management consultant at Roland Berger. My years at consulting, sales and management taught me that I liked selling and management functions and that I could add value by bringing in an analytical perspective. Nevertheless, I knew I was still missing something. I knew I wanted to be an entrepreneur and grow something with which I could relate, something that could instill a sense of purpose in me.

Polsky: Describe the process of raising your search fund.

Alves: I heard from other searchers it would be hard to bring in American investors before getting Brazilians investors. But unfortunately, the search fund concept was, and still is, practically unheard of in Brazil. I am currently actively working to change that, but my initial conversations were not promising. So, my husband, who was also a full-time Booth student, and I made a plan. We would work in the US for 2–4 years, and then I would raise the fund in the US and base the search fund there. While all this was happening, we went to IESE, in Barcelona, as part of the Booth international exchange program. There I took a class named “Search Funds”, ministered by Peter Kelly, who is also a professor at Stanford University. I introduced myself to him after class and shared my path through entrepreneurship, and he was surprised to hear I was not pursuing the search fund in the short term anymore. We talked about timing, and how it affects me more as a woman who wants to have kids some day and about what was detaining me from raising the fund to search for a company in Brazil. He asked me if I would do the search fund in Brazil if I got my first few US investors and I told him that I would.

By the end of that class, I had four committed US investors. My husband and I ended the week in a business dinner with two of the investors and their families, and the same day, my husband got the job offer he had been hoping for. We weighed the different options that weekend and ultimately decided to pursue the search fund path. He told me: “I would rather be married to the Lysandra who tried and failed than with the one who didn’t try and regretted.”

I was introduced to the other investors mostly through referral from the initial ones. I started the fundraising in February and completed the fund in June. Peter was — and still is — a mentor to me.

Polsky: What does the entrepreneurship-through-acquisition ecosystem look like in Brazil?

Alves: Meissa Capital is the first search fund, as we understand the concept in the US, to start the searching process in Brazil. Before me, a handful of investors/entrepreneurs have acquired companies in models that resemble search funds, but using only 1–2 investors with deep pockets to back the deal. Today, there are two search funds founded by MBAs operating here, including Meissa Capital, and I know of one more being raised. Brazilian investors are not familiar with the model, as they are used to investing after a target is identified, so it is still a hard sell.

Polsky: What has been the most rewarding part of your journey as a searcher?

Alves: Just one month after I started the search, I met the founder and CEO of a waste and water treatment company, who had been running his business for over 30 years. His company had recently shrank over 50% due to a major public contract that was not paid in full, which had put his company in distress. After hearing his story and telling him a little about the search fund model (and also letting him know that companies in distress were not in my mandate), we started discussing ways in which he could put his company back on track. We talked about some ideas I had for him, everything from operations to new product development and growth strategy, and at some point he told me I was the CEO he would like to see running his company.

At that moment, I knew I was on track. Not because I found a good deal, because I hadn’t, but because after one candid discussion, I had gained someone’s confidence in my ability to run his company. Such encounters are the most rewarding part of the search.

Polsky: Is it common for women to start their own search fund? Why do you think that is?

Alves: Statistically, there are not many women starting search funds. I can’t say why more women don’t do it. However, I can say why I almost didn’t.

Although I was passionate about doing a search fund, I thought I had a slim chance of success. I had no previous investment banking or PE experience; I didn’t believe I could get Brazilian investors to come on board; and if I didn’t get Brazilian investors, I didn’t think there was any chance to get American investors. But looking back, the support was there for me to find. All I had to do was overcome my own biases and go for it. I didn’t get the Brazilian investors first, but I did get the American ones. And they didn’t care about my lack of deal experience; they were actually far more interested and impressed with my sales and management experience. Raising the fund was hard. But honestly, it was incredibly doable.

Polsky: Finally, what advice do you have for others who might be interested in starting a search fund?

Alves: My advice for those — men and women — who might be interested in starting a search fund is:

(i) Make real sure you understand what you are getting into and that this is what you really want — it is an emotional roller coaster with one big reward at the end.

(ii) Get your family on board — this is not a sole venture and it requires a true partnership

(iii) Commit as early as possible — it is great if you can intern with a searcher or an operator, but it is not necessary in order to get started.

(iv) Just dare to try — you will be impressed with the outcome.