The story of family offices has always been closely aligned with the evolution of venture capital. Prominent families have been making direct and indirect investments in new enterprises for centuries. Illustrious names such as Phipps, Rockefeller, Wallenberg and Zennstrøm have given rise to some of the biggest players in the VC industry today, such as Bessemer Ventures, Venrock, EQT and Atomico.
Like venture capitalists, family offices tolerate and understand risk. Both recognise that it takes capital and patience to build new category winners. And with more family offices now looking to diversify away from public markets and traditional assets towards investment into emerging sectors and companies, there’s every reason to push for closer alignment between these two interlinking worlds.
As UBS highlights in its 2021 Global Family Office report, macroeconomic headwinds are encouraging offices to explore alternative means of deploying capital. The research shows that venture is now the second most popular type of private equity investment amongst family offices.
And yet, we could argue that venture capital remains an under-exploited opportunity within family office asset allocations. Within a vast and crowded market, like-minded VCs and family offices struggle to find one another. And even when they connect, there isn’t always a clear understanding of how the other party likes to operate, or indeed, how to work effectively together.