Plenty of M.B.A.s finish business school with a hot startup pitch for investors. The latest breed of student-entrepreneur is skipping the startup part and pitching themselves as the investment.

Consider the model a SPAC of sorts—akin to the stock-market trend in which a special-purpose acquisition, or “blank-check,” company raises money and lists its shares, then finds a private business to merge with. In this case, the investment vehicle is a fund for a newly minted M.B.A. graduate. The M.B.A. uses the money to search for a privately held, under-the-radar business and run it as chief executive and part owner.

These so-called search funds came on the business-school scene decades ago, but they have taken off in the pandemic years as investors—awash in capital—look for promising places to put it. 

Arielle Lawrence, a student at MIT’s Sloan School of Management who plans to search for an acquisition this year, came to business school with a corporate-finance and private-equity background. Her parents, the first in their families to go to college, were skeptical and asked why she was rejecting a more stable career.

Arielle Lawrence attends MIT’s Sloan School of Management.

Photo: Arielle Lawrence

“The reality is, there’s a risk and a choice that every entrepreneur makes,” she said.

Most M.B.A. searchers hailed until recently from Harvard and Stanford universities, whose M.B.A. programs supported them with relevant coursework and in-the-know professors. Now, more schools and students are getting in on the action. 

According to Stanford’s Graduate School of Business, there were 51 new search funds in 2019, then an all-time high. Its preliminary numbers show at least 70 in 2020. It estimates more launched in 2021. 

Business schools see search funds as a way to compete with other programs on entrepreneurship. The returns have been good enough to entice investors, who after the search often finance the acquisition. A Stanford study of nearly 400 search funds through 2019 found three-quarters of companies acquired by searchers yielded a positive return for investors. Of those, 69% delivered at least double the return on investment. 

The money often comes from family offices and institutional investors, as well as friends and relatives or high net-worth individual investors, said Sara Heston, the associate director of Stanford’s search-fund project. 

For M.B.A.s, the search-fund model is a way to become a CEO and business owner soon after graduation, without starting a business from scratch. Though some non-M. B. A.s have led search funds, recent M.B.A. graduates have used the networking and mentoring support they get from their business schools to start the majority of them.

But the path can be challenging. Identifying a business means cold calls to potential sellers and many rejections. About a third of searches have ended without an acquisition. Searchers miss out on campus recruiting for jobs with big names in Silicon Valley, on Wall Street or at Fortune 500 companies.

“There’s no longer a prestigious consulting-firm, investment-bank or private-equity logo on your Patagonia vest,” said Chris Fuller, a partner at the Boston-based Search Fund Accelerator, which has mentored and funded more than 20 searchers since 2015. 

The companies that M.B.A. searchers target aren’t flashy startups or well-known brands. Many are family firms without a succession plan or companies too small to attract typical investors. The searchers typically hold the businesses for six to 10 years before exiting, sometimes selling to private equity. Recently acquired companies operate in insurance sales, security, software services, pest abatement and construction, Stanford said. 

Duke University, Dartmouth College and Columbia University have recently launched courses on the model. New clubs for learning about search and leadership strategies at the Massachusetts Institute of Technology, Babson College and Northwestern University say they have collectively attracted hundreds of students over the pandemic. Investors and students are networking at events hosted by schools, clubs and professional groups like the Women’s Search Network, whose membership has grown to more than 80 from 15 in 2019.

Hereford Johnson III has had his sights on being an entrepreneur.

Photo: Sean Su

At Northwestern’s Kellogg School of Management, Matt Brugner has raised $500,000 to cover two years of full-time searching for a niche software business. Before business school, Mr. Brugner, 28, wanted to be an entrepreneur but didn’t have a startup idea. Hereford Johnson III, who runs the Kellogg search-fund club with Mr. Brugner, has tried to distinguish his outreach to companies from other searchers and private equity. Part of that means committing to move with his wife to the business’s location. 

In May, Lance Barnard, a 2021 graduate from the University of California, Berkeley’s Haas School of Business, acquired Ward Road Pharmacy, a 28-employee company that delivers medicine and products like feeding tubes to long-term-care facilities. The company’s Colorado location—near mountains and with professional opportunities for his wife—as well as its stable, recurring cash flows, made it an attractive buy, he said. 

He initially made small changes, purchasing bar-code scanners, billing software and extra shelves. Now he wants to boost sales by expanding marketing; the business, which he said generates roughly $10 million in annual revenues, has historically grown by word-of-mouth. 

The 29-year-old Mr. Barnard said he sensed employees’ skepticism at first. “You see this young face,” he said. “What is this guy going to do?”

Two Stanford alums, Kevin Taweel and Jim Ellis, led the most successful search fund on record. They purchased Mr. Rescue, a roadside-assistance company, in the 1990s for a few million dollars, according to Stanford’s search-fund project. The company, renamed Asurion LLC, now sells insurance for electronics such as phones and computers and is worth several billion dollars, Stanford said. The company declined to comment on its financials.

Investors said they know searchers are often inexperienced, so the businesses they target must be in growing markets and have strong recurring revenues. 

That way, “even if these new CEOs make mistakes and screw up—which we expect them to do, they’re new CEOs—they can’t screw things up that badly,” said Sara Rosenthal, a partner at TTCER Partners, which primarily invests in search funds.

Write to Lindsay Ellis at lindsay.ellis@wsj.com