Cross-border investments and fundraising communication in entrepreneurship-through-acquisition: exploratory evidence from search fund entrepreneurs in Asia

Abstract Entrepreneurship-through-acquisition (ETA) or entrepreneurial buyouts are gaining prominence in international buyout markets, though most transactions and financial investors remain concentrated in North America. We use nascent markets in Asia as our research setting to study how buyout entrepreneurs in such emerging ETA markets adapt their communication strategies to attract resources from international investors. More specifically and responding to calls for more research on entrepreneurial buyouts, we investigate how these entrepreneurs shape their fundraising communication in securing financial capital for search funds, a type of entrepreneurial buyout. Using a qualitative, multiple case study approach and signaling theory, we explore six Asian search funds and conducted three expert interviews with international investors. Our exploratory findings emphasize the importance of tailored communication strategies to bridge understanding gaps and build legitimacy between SF entrepreneurs in nascent markets and international investors. The SF entrepreneurs in our sample use educational strategies to familiarize investors with local business systems, highlighting economic opportunities, professional experiences, and market conditions. A dual strategy emerges: educating local investors on the SF model while addressing international investors’ concerns about reliability and market potential through local endorsements and financial commitments. These efforts mitigate risks and validate opportunities, aligning with research on private equity syndication in cross-border transactions. This is the first study to apply signaling theory to the fundraising processes of search fund entrepreneurs in nascent markets. We, therefore, extend signaling theory to the ETA context, contributing to the entrepreneurial finance research. The research provides practical guidance for buyout entrepreneurs, highlighting the critical role of fundraising communication in building legitimacy and securing investment in nascent ETA markets.