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Family offices invest a significant amount of capital in startups every 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. Latest report From PricewaterhouseCoopers.
Despite their prevalence in startup deals, family offices can be an obscure category of investors for founders, as they are not as public or easy to find as venture capital firms. Several family office investors said during the TechCrunch Disrupt session that the easiest way to connect with investors like them is to look for family offices that align with what the startup is building.
When founders look to connect with family offices, they should look for families who have made their fortunes in the sector in which they are building the startup, said Bruce Lee, founder and CEO of Keebeck Wealth Management.
“[Family offices]should kind of look for areas where they feel like you have an advantage, or the family has an advantage in a particular technology, so that you can add strategic value not only to the conversation, but to the investment itself,” Lee said. He said.
Ettie Lazarian, director of Elle Family Office, agreed and added that families want to find businesses that complement their own.
“When a family invests in something that has to do with the business you’re in, it can bring a lot of value to your company, as well as synergy,” Lazarian said. “So we usually look for something that can complement each other.”
Both Lazarian and Lee added that this alignment isn’t just about finding family offices, but it’s also one of the things that makes family offices good investors. Family offices tend to invest in companies they care about on an emotional level compared to traditional venture capital, Lazarian said. She added that when family offices invest, they do so to see the company succeed no matter the circumstances, which makes them a more flexible and patient investor.
“When you work with venture capital, you always feel like you have a gun to your head and you have to… deliver on their goals,” Lazarian said. “When you work with a family office, it feels like the runway is wider. You have more time. It’s 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 industries, industry or regional conferences are a great place to start because family offices frequent these events.
Once a founder reaches out to a family office, Lazarian and Lee said they should expect it to be presented differently. While startups can pitch venture capital projects based on dreams and aspirations, that doesn’t work in family offices. Companies must showcase their expectations and metrics, not that they will be a unicorn in the future.
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