Family offices are increasingly drawn to venture capital as a way to diversify their portfolios and access high-growth opportunities. However, many face operational challenges due to small teams and limited internal resources. Unlike institutional investors with dedicated analysts, family offices often rely on a few individuals to handle research, evaluation, and due diligence.
Limited staff
A recent UBS report found that family offices typically have low headcounts. As a result, family office employees often have to take on multiple roles when investing in venture capital. That means tasks like conducting research analysis, company evaluations, and completing due diligence may fall on the same individuals.
The sheer volume of information that needs to be reviewed—screening through financial reports, sifting through pitch decks, examining market trends, and completing an analysis—can take up an enormous amount of time. It’s not a far cry for a family office to need an AI-powered solution that can reduce time spent on investment workflows.
Fast-tracking research
The main issue causing research to take a long time is the difficulty of gathering all the necessary information. This process is not only time-consuming, but also quite challenging. Finding relevant data often involves reading lengthy reports and searching the Internet to verify information, which is buried within large datasets. Family offices must sift through vast amounts of scattered sources, including spreadsheets, market reports, pitch decks, and regulatory filings. This is where using AI-powered tools can make a massive difference in the research process.
“Using AI-powered tools, we can quickly turn raw information into a structured analysis, significantly improving our ability to evaluate opportunities in a timely manner.” — David Febrillet, IronArc Ventures.
As David from Iron Arc Ventures discovered, modern family office software powered by AI, like Velvet, can help do a lot of the heavy lifting in research. For example, users can extract and summarise key information from multiple sources on the platform on the same dashboard. That includes scanned documents and emails, and because it’s also plugged into the Internet, it can also pull out relevant data in real-time.
Automating due diligence
Due diligence, perhaps the most crucial step in venture capital investing, is also one of the most resource-intensive stages. The process requires in-depth legal, financial, and operational reviews to avert sinking investments into a bottomless pit. In other words, it’s not a one-man show; doing it properly requires a team effort. Instead of emailing back and forth, family offices can speed up the vetting process by leveraging AI-powered platforms like Velvet.
AI can support the due diligence process by quickly analysing data, cross-checking information against public and proprietary databases, and flagging potential red flags. For example, these tools can automatically scan thousands of financial documents and news articles to identify inconsistencies or areas of concern, saving analysts countless hours of manual work.
Velvet AI, however, takes it a step further. The platform features a networking tab that pulls in all contacts related to an investment. It also has collaboration tools that allow teams to tag and even chat with one another regarding potential companies in which they are invested. For family offices, this means streamlined access to legal and financial input, an all-in-one dashboard, and no more endless email chains and attachment overload. (View customer success demo here.)
“Velvet AI has become an essential tool in our investment process, saving time and ensuring that we don’t overlook critical details.” — Nectarios Economakis, Amiral VC.
A new era for family offices
To sum up, family offices are increasingly looking to expand their direct investments into venture capital. However, with their limited headcount, teams are often thin when it comes to conducting research and due diligence on time.
Modern family office software like Velvet offers family offices practical tools that make direct venture capital investments more manageable and efficient. With its collaborative features and plugs to real-time data, they act as an enabler, helping small teams process vast amounts of information quickly so they can make better-informed decisions together.
About Velvet
Velvet is AI built for DPI.
It works as an AI copilot for private investors to centralize the disparate data across the many sources of information they deal with daily, and automate the workflows around investing with that data.
We save VC investors time in daily tasks that can easily be automated, empower them with more information to make better decisions, and help them scale their firms with the power of LLMs instead of more headcount.
