Family Offices: The Hidden Pond of Patient Money
Organizations rallying around to raise funds for venture investment face some hard realities. Venture capital dollars are not as easily accessible as they used to be years back, and for businesses with a viable opportunity to succeed, the terms are becoming less appealing by the day. The good news for new companies seeking finance is that another direct investment route is growing: the family or multi-family offices of well-to-do people and families.
Family offices are essentially a pond of wealthy families' money. The main goal is a long-term, stable investment with a secured, tax-efficient return. They also have great fluidity in the kind of assets they venture into, as they don't have stiff investment policies, limitations or principles from multiple stakeholders. Because they are not in it for a quick exit, but for a long-term piggyback on an organization's long-term growth, their incentives regularly work in harmony with the entrepreneur. This makes it win-win for entrepreneurs and investors.
The problem with family offices is that they usually don't have a website, don't advertise, and locating them on Google is more or less playing the lottery. That is why angel investor networks are generally incredible places to get a scoop on the hidden pond of money and an introduction to individuals who have the keys to this pond.
For startups, it is imperative to source financing options that offer entrepreneurs certain benefits. It all starts with seeking investors in the immediate connections the entrepreneur already has. It is one of the things you stand to enjoy when you first install a board of directors. There is an excellent probability that investors will rise from that crop of individuals. If there are not enough people to fill that role, other opportunities might arise, such as angel investors and family offices.
It truly boils down to how vast your network is. Through your network, you can connect with successful entrepreneurs in the same field who have an established family office or are involved in a viable investment setup that aids startups. You will get to rub minds with these entrepreneurs and also tap into their stream of experience.