Tips to Successfully Raise Family Office Capital in the UAE
You have to build relationships before you need them. The hardest time to build relationships to secure capital is when you need it. If family office money is part of your capital raising strategy and you want to cultivate these relationships on your own, you should consider integrating yourself into that ecosystem and providing value to families before you even have an ask. Helping a family with due diligence on an opportunity will help you earn their trust such that when you do come to them with an ask, they will be more inclined to invest. Hiring a connected group can improve your ability to meet families.
Persuade trusted advisors. Everyone has trusted friends or business advisors, especially really successful people. Many have Chief Investment Officers and others have multi-family offices that manage their investments, among other things. Estate planning attorneys, proxy’s, accountants and confidants also have access to the decision-makers. Networking directly with families is primary in importance but getting to their influencers can help you get a meeting with them and convince them to make an investment.
Explain your company at the appropriate level. Family office investors are neither stupid or unsophisticated. They might not, however, have a deep understanding of the technology space. Make sure to treat them with respect and speak intelligently to them as they are very savvy people. Try not to use tech jargon or at least define it when used. You might need to explain more than once and educate the investor on the basics of the industry. Do not assume that they will understand your data; if they do not understand, they will not invest.
Hold their hands through diligence. Unlike a typical venture capital financing where fairly standard due diligence questions are asked, family office investors might have specific idiosyncrasies or questions that are important to them. Facilitating their due diligence is important; for example, putting them in touch with relevant experts who are not affiliated with the company will go a long way to earn their trust. They might not come in on this round but by building that credibility in diligence and laying out the true risks, they might want to invest at a later date.
Follow-up. Families do not usually have a need to deploy a certain amount of capital by a certain date. Often they take longer to make decisions and might not always come to what you think is a rational conclusion. Respectful yet persistent follow-up is required to make sure they are staying on track. Respect their personal time and space but just know that you job is to convince them to invest. Sometimes that means pushing harder and other times pushing less. When pushing, share positive updates and do not repeat a sales pitch over and over.
It is hard to find active families and understand their investment decision-making. That said, any CEO that can successfully crack this code and attract family office investment can become enormously successful and control their company’s destiny much better than they would be able to with a venture-backed company due to the potential misalignment around time horizons and value creation strategies that venture boards and management teams often encounter.
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