Family offices invest significant amounts of capital into startups every year. According to a recent report from PwC, 27% of the total startup deal value in the first half of 2023 came from deals involving family office investors.
Despite their prevalence in startup transactions, family offices are not as public or as easy to find as VCs, which can make them a mysterious group of investors for founders to navigate. Several family office investors said on the TechCrunch Disrupt panel that the easiest way to reach investors like them is to find a family office that matches what the startup is building.
Bruce Lee, founder and CEO of Keebeck Wealth Management, said that when startups want to connect with family offices, they should look for families who have built wealth in the field the startup is building.
“(Family offices) need to find areas where they think they have an advantage, or where their family thinks they have an advantage in a particular technology, so they can add strategic value not only to the conversation, but to the investment itself.” said.
Eti Lazarian, principal at Elle Family Office, agreed and added that the family wanted to find a business that was complementary to their own.
“Having your family invested in something that is relevant to the business they are in can bring a lot of value to your business, not only to their collaboration,” Lazarian said. “So we’re usually looking for things that can complement each other.”
Lazarian and Lee added that this alignment is not only relevant to finding a family office, but is also one of the things that makes family offices good investors. Lazarian said family offices tend to invest in companies they care about on an emotional level compared to traditional VCs. She added that when family offices invest, they can be more flexible and patient investors because they do so to see the company succeed no matter what.
“When you work with venture capital, it always feels like you have a gun pointed at your head that you have to achieve,” Lazarian said. “Working with a family office feels like the runway expands further. I have more time. “I think I’ve found that I have more air to breathe as I work toward my goals.”
Lazarian and Lee added that for startups looking to meet family offices in their respective industries, industry or regional conferences are a good place to start because family offices often host these events.
Once a founder is connected to a family office, Lazarian and Lee said they need to promote themselves in different ways. Startups can pitch their dreams and aspirations to VCs, but not to family offices. Companies should provide forecasts and indicators, not become future unicorns.
