Family offices have been a great way to connect with successful entrepreneurs, professionals, and individuals with shared perspectives. While most companies endlessly pursue VC firms, I have been fortunate to work inside family offices, allowing me to share some of these insights below;
- Long-term capital. Family offices are long-term focused. They exist to preserve, grow, and transfer wealth across generations. This means if you are not in for the long game, family offices probably isn’t for you. Unlike venture capital firms which have contractually shorter time horizons, family offices are aligned with Missionaries, not mercenaries. Furthermore, family offices do not adopt a “spray and pray” approach to investing but rather seek out disruptive opportunities and then concentrate resources on these opportunities.
- Stronger alignment between founders and Family Office. Founders benefit tremendously from the entrepreneurial DNA of the founders of most family offices, in addition to the insights and connections of the family. This is where family offices generally outshine VC’s, with surgical focus, family offices provide advice, strategic introductions, and capital beyond early-stage investing without the drama and aggression because every deal is based on high-conviction. An example will be a former financial entrepreneur investing in FinTech startups due to his/her unique insights. You see mentorship, networking, experience, in addition to funding coming together in a win-win manner.
- Strategic partner as opposed to a Financial partner. This means doing more than providing capital to generate incremental alpha. When working with a family office, early stage companies should understand why the family office exists, and be prepared to develop and implement a long-term plan to deliver long-lasting value. This means that management and sound governance must be high priorities, which is why many family offices require a seat on the board. The company will have access to the family office network to provide strategic advice, market intelligence, and other tangible benefits that require a level of oversight. Finding the right balance between giving the entrepreneur room to grow and the need for transparency that family offices require is critical in making these partnerships successful.
- Family Offices have Fun! Yes, you heard that, family offices can be alot of fun as you get to know the family more. Invitations to clam bakes, family events, and networking with other professionals and individuals are an opportunity to grow. The family office has you there because they really want you there, not because you’re just another portfolio company and they need to fill seats.