When looking for an investor for a family office, founders should strive for sector adaptation

Family offices invest significant funds in start-ups yearly. According to the study, in the primary half of 2023, 27% of the whole value of start-up transactions got here from transactions involving a family office investor. latest report from PwC.

Despite their common presence in startup-related deals, family offices could be a secretive investor class for founders to navigate because they should not as public or as easy to search out as VCs. Many family office investors said throughout the TechCrunch Disrupt panel that the best approach to reach investors like them is to search out family offices that align with what the startup is constructing.

Bruce Lee, founder and CEO of Keebeck Wealth Management, said that when founders need to approach family offices, they should look for families which have made their fortunes within the sector where the startup is growing.

“(Family offices) kind of have to look for areas where you feel like you have an advantage or that the family has an advantage in a particular technology so that they can add strategic value not only to the conversation but also to the investment itself,” Lee said.

Eti Lazarian, director of Elle Family Office, agreed and added that families want to search out businesses which might be complementary to their very own.

“When a family invests in something that relates to the business they are in, they can bring a lot of value to your company and also to the partnership,” Lazarian said. “So we usually look for something that can complement each other.”

Both Lazarian and Lee added that this alignment is not just about finding family offices, but can be one in every of the things that make family offices good investors. Lazarian said family offices tend to speculate in firms they care about on an emotional level, in comparison with traditional VCs. She added that when family offices invest, they do it to make the corporate succeed regardless of what, which might make them more flexible and patient investors.

“When you work with venture capitalists, you feel like you always have a gun to your head that you have to… execute to achieve your goals,” Lazarian said. “When you work with a family office, it feels like there’s a longer runway. You have more time. When you work towards achieving your goals, you feel like you have more air to breathe.”

Both Lazarian and Lee added that for founders who want to satisfy family offices of their industries, industry or regional conferences are a excellent place to begin because family offices often host most of these events.

Once a founder contacts the family office, Lazarian and Lee said they should expect to be presented with an offer in another way. While startups can spend money on VC capital based on dreams and aspirations, this does not work for family offices. Companies should present their forecasts and metrics, not present them as future unicorns.