The Family offices invest a substantial amount of capital in startups each year. In the first half of 2023, 27% of the total value of startup deals came from deals that included a family office investor, according to a recent report from PwC.
Despite their prevalence in startup dealmaking, family offices can be a mysterious class of investor for founders, as they are not as public or as easy to find as venture capitalists. Several family office investors say the easiest way to approach investors like them is to look for family offices that are aligned with what a startup is building.
Bruce Lee, founder and CEO of Keebeck Wealth Management, said that when founders look to connect with family offices, they should look for families who made their wealth in the sector in which the startup is being built.
“With a family office you have to look for areas where you feel you have an advantage, or where the family has an advantage in a particular technology, so they can add strategic value not only to the conversation, but to the investment itself,” Lee said.
Eti Lazarian, director of Elle Family Office, agreed, adding that families want to find businesses that are complementary to their own.
“When a family invests in something that is related to the business they are in, it can bring a lot of value to their business, as well as a collaboration,” Lazarian said. “So we usually look for something that can complement each other.”
Both Lazarian and Lee added that this alignment is not only related to family office search, but is also one of the things that makes family offices good investors. Lazarian said that family offices tend to make investments in companies that they care about on an emotional level compared to traditional venture capitalists. He added that when family offices invest, they do so to make a company successful no matter what, which can make them more flexible and patient investors.
“When you work with venture capital, you feel like you always have a gun pointed at you and you have to… meet their objectives,” Lazarian said. “When you work with a family office, it feels like the runway is wider. You have more time. It feels like you know you have more air to breathe as you work toward your goals.”
Both Lazarian and Lee added that for founders looking to meet family offices in their respective industries, industry or regional conferences are a great place to start because family offices frequent these events.
Once a founder connects with a family office, Lazarian and Lee said they should expect to present them with a different proposition. While startups can offer venture capitalists their dreams and aspirations, that doesn’t work with this type of investor. Companies should present their projections and metrics, not say they’ll be a future unicorn.
