Family offices and venture deal flow – the holy grail

For family offices looking to grow their venture portfolios, generating, and managing deal flow is a significant challenge. From building a pipeline of startups to filtering out the most promising deals, what’s the best way to approach it?
venture deal flow

What you need to know

  • Family offices are increasingly involved in venture investment, which means a focused approach to deal flow is critical.
  • They need to progress from opportunistic deal sourcing to building a deal sourcing machine that will enable the portfolio to scale.
  • This requires a strategy, framework, and investment thesis, to ensure that they’re attracting the volume of deals – and the right kind of deals.
  • Achieving quality deal flow is dependent on building a brand, reputation, and relationships along with in-depth analysis and due diligence to filter out the best deals.
  • Family offices need to be clever when deciding on their involvement to find a ‘model’ that enables them to succeed with deal sourcing and their overall venture activities.
Venture Capital Updated on October 26, 2022

Family offices have traditionally flown under the radar when it comes to venture investing, but their involvement and profile in the space are rising. As of 2021, around 80% of family offices were making venture investments regularly – up from 40% a decade ago. And the amount they’re investing has increased, averaging around 12% of their portfolios last year, up from 10% the year before.

For family offices looking to grow their venture portfolios, generating, and managing deal flow is the first big challenge. According to the Harvard Business Review, only around 1% of venture deal flow ends up as investee companies. So out of every 200 opportunities, just one will make it into the portfolio, and if you want to invest in a diverse range of businesses, then thousands of potential deals need to land on your desk.

Achieving the holy grail of deal flow means not only building up a substantial pipeline of startups, but also ensuring they match your areas of interest, and having a team with the capacity to assess and ultimately filter out the best potential deals. How you approach the deal flow process will ultimately make or break your venture ambitions.

Scaling up the deal sourcing machine

Deal flow can originate from a whole variety of sources, but for a family office starting out, it is likely to be opportunistic, primarily originating from referrals from other family offices, entrepreneurs, professional services firms, or as an LP as part of a venture capital fund. As you look to increase your involvement, the challenge is to build a deal sourcing machine, incorporating inbound and outbound leads, that will enable the portfolio to scale.

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

Create your free account to continue reading this insight.

Join our community and become a Simple member today.
Not yet a member?

Sign up for a free account by clicking on the link below.

Register New Account