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Family Office Investment Guide: An Alternative to Venture Capital


Detailed article from TopTal on a generally unknown asset class. I'm a bit surprised by the average portfolio allocation as I believe direct PE investments take a lower % vs. fund investments. Take a look at the strategies for the search for some practical tips on how to get funding from FOs!



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15th Century Florence…

Family offices began investing in early-stage ventures centuries ago. In 15th century Florence, the Medici family actively supported young artists by investing in their works (venture capital of its day), patronage which provided the start for some of the greatest masters of all time from Leonardo Da Vinci and Michelangelo to Galileo and Botticelli. Amazingly, this was 500 years before the first formal venture capital firm (ARDC) was founded.

…to Present Day

Fast forward to the present day. You are probably familiar with such household VC names as Sequoia, Andreessen Horowitz, Benchmark Capital, and Kleiner Perkins—firms that comprise the investor bases for ultra-successful startups such as Uber, Facebook, and WeWork. But make no mistake: Capital allocated by family offices also exists within these capital stacks, albeit quietly. One simply wouldn’t come across these secretive names unless one knew where to look. For example, in the upcoming IPO wave, there are unicorns such as Pluralsight that are backed by a multi-family office, ICONIQ, belonging to the Zuckerberg and Sandberg families, alongside mainstream venture capitalists like Insight Venture Partners.

Over the last five years, I have met many an entrepreneur who has expressed curiosity about the largely under-tapped world of family offices (“famos”). Some entrepreneurs come across low-profile famos in high-profile deals, while others are introduced or inadvertently advised to reach out to famos by traditional/existing investors, as an alternative source of capital.

This article isn’t intended to advocate for or against family offices as a captive investment source. It is instead intended as a broadly informative guide for those less familiar with the niche. I also hope to expose its potential as a source of patient and strategic capital for the entrepreneur who takes the time to seek it out and understand its workings.

Click here to keep reading.

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