Family offices and venture capital: here's how to get the most out of your partnership

Many family offices invest in venture capital funds, and by knowing what to look out for when entering into these partnerships, they can get that much more out of them. Here are some key considerations and tips for approaching a VC partner.
venture capital for family offices

What you need to know

  • Most family offices choose to invest at least part of their venture allocation via venture capital funds, but how they approach these partnerships can have a big impact on how much they get out of them – both in returns and experience.
  • With the industry booming, family offices have an even greater choice of funds to choose from – it just comes down to how you choose a VC partner.
  • Knowing what you’re looking for, adding value where you can, developing a communication style that’s right for you, and, above all, patience, are some guidelines to follow to find the right venture capitalist firm for your family office. Here we discuss some of the key considerations to bear in mind.
Venture Capital Updated on October 21, 2022

Making direct investments into promising startups undoubtedly has its attractions for family offices (FOs), but on balance, most firms tend to opt for a hybrid approach, by splitting their allocation across direct investments and specialist venture capital funds. In fact, research shows that it is roughly an even split between the two, with FOs on average allocating 46% of their venture portfolio to funds and 54% to direct investment.

This split makes a lot of sense, as covered in previous articles. Setting up an internal venture capital function is expensive, and time-consuming while managing a whole portfolio requires specialist skills and experience. In contrast, VC firms offer a one-stop-shop, where family offices can access all the talent and knowledge they need in one place while spreading their risk over a whole portfolio.

Furthermore, the venture capital industry, particularly in Europe, has matured rapidly in the last five or ten years, with a host of new funds entering the market, catering to different sectors, technologies, and sizes of business. In 2020, European VCs raised more funds than they had in any previous year, despite the impact of the pandemic, and 2021 has got off to a similarly strong start.

About the Authors

Kjartan Rist

Kjartan Rist

Venture capital investing

Kjartan is a Founding Partner of Concentric, the London & Copenhagen-based venture capital firm. He helps family offices gain a better understanding of VC investments and how to allocate towards this.

Connect with Kjartan Rist

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