Unlocking Family Office Investments: A Guide for Founders

In the competitive world of startups, navigating funding sources can be a daunting task. A significant player in this landscape is family offices, which are known for investing a hefty portion of their assets into new ventures. In fact, a revealing report from PwC indicates that during the first half of 2023, family offices accounted for a stunning 27% of the total startup deal value.

However, family offices remain an enigmatic entity compared to traditional venture capitalists (VCs). Founders often find it challenging to identify and connect with these investors, as they typically operate more discreetly. At a recent TechCrunch Disrupt panel, multiple family office representatives shared invaluable insights regarding effective strategies for founders seeking investment.

Bruce Lee, CEO of Keebeck Wealth Management, emphasized the importance of sector alignment. He advised founders to target family offices that have a history of wealth creation in the same industry in which they operate. “Family offices thrive in areas where they possess knowledge and expertise,” Lee noted, highlighting that this alignment allows them to contribute strategic value that enhances both the investment and the partnership.

Eti Lazarian, a principal at the Elle Family Office, echoed these sentiments, stating that families are keen on investing in sectors that complement their business interests. “When a family invests in a business that relates to their own, they can offer substantial value and collaboration,” she explained, noting the synergistic relationships that can emerge from these ventures.

One of the distinguishing factors of family offices is their emotional investment in their ventures. Lazarian explained that these investors often pursue companies they are passionate about, resulting in a more committed and supportive partnership compared to conventional VCs. “With venture capital, there's a persistent pressure to meet specific milestones. In contrast, family offices tend to provide a nurturing environment that allows for more flexibility and a longer runway for growth,” she stated, likening the experience to having “more air to breathe” as startups work toward their objectives.

For founders eager to connect with family offices in their respective fields, both Lazarian and Lee recommend attending industry-specific or regional conferences. Family offices are known to frequent these events, providing a productive environment for networking and establishing relationships.

Once a connection is made, founders should adjust their pitching strategy. Unlike VCs, who may respond to visionary aspirations, family offices are more focused on concrete data and metrics. As Lee advised, “It's essential to present clear projections rather than just the dream of becoming the next unicorn.”

In summary, understanding the unique approach and priorities of family offices can significantly enhance a founder's chances of securing investment. By aligning with the right family offices and presenting compelling, data-driven pitches, startups can tap into this invaluable source of funding and support.