In the international venture capital industry and startup world, family offices are getting more attention nowadays – for a couple of good reasons. Recently, Crunchbase published a compilation of the “family offices with the most VC deals”. The list is headed by Omidyar Network (family office of the eBay founder Pierre Moidyar) and Kapor Capital. We think that family offices are good startup investors for every company for a couple of reasons.
1) Family offices are long-term oriented
Usually, venture capital funds have a certain time horizon. So, they try to maximize their returns in this period through higher valuations, a M&A deal or an IPO. As a consequence, many startups are growth driven, striving for higher revenues at any price. Family offices are (often) investing in a different way: they try to support companies in a more long-term oriented way, sustainable growth instead of hockeysticks. This might not be the ideal investor for everyone, but we’d state that in most cases it gives the supported company a better chance of growing a lasting business.
2) Family offices have a strong network and good industry knowledge
Often, family offices evolve from already existing family businesses. As a consequence, they have a good network in the specific industry and know how things are working. Especially in rather traditional fields like finance, real estate or the industry it is essential to cooperate with big companies and to rely on a strong network. Often family offices can offer that.
3) Family offices are Evergreens
Besides a limited time horizon, usual venture capital funds also only have limited funds. This means that they can finance startups only in limited rounds. Family offices trump VCs at this point. Through their evergreen structure and frequently substantial assets under management, they can accompany startups over multiple funding rounds.
Picture source: Al ghazali
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