Venture Capital – direct investments vs fund investments
Successful entrepreneurs are in most cases the foundation of wealthy families. One could argue, they created the whole venture industry. Family offices and Venture Capitalists share the passion of supporting entrepreneurialism. Therefore it is not a surprise that investment arms of family offices have established dedicated venture arms: Phipps Family (Bessemer Ventures), Rockefellers (Venrock), Wallenberg Family (EQT), Iridium Family Office (Venionaire Capital (Group)).
Many family offices have a strong preference for direct investments in startups or scale-ups (esp. those created post 2015). New family offices are often backed by serial entrepreneurs, next generation or even millenials with a strong background in tech. The trend is clear, but the execution of a direct investment strategy demands a dedicated management team and a very special set of skills. The effort to support and accelerate growth of startups shall not be underestimated.
Building an asset-allocation around Venture Capital – as a core, is often a step too far for family offices. Investing in funds is a great alternative, but beware it is a complex landscape to navigate. Selecting the right funds is difficult – don’t let advisors fool you. Cambridge Associates notes that “Many families assume there is less risk in the “famous” funds and lament the inability to gain access. However, new and developing funds actually are perennial top performers.“ We found (for us), a hybrid investment model is the best way forward.
News and Insights – offers a set of micro-blog articles (no more than 3 paragraphs) on different topics. The purpose is to fuel discussions around across different topics.
