Many entrepreneurs, be they existing businesses or startups have never heard of a “Family Office.” However, the Family Office is a type of funding source that should not be overlooked when searching for funding or capital raise. In this article, we’ll explore the Family Office – What it is and how they can fund your capital raise… Enjoy!
Looking for Funding / Capital Raise
Whether you’re an existing organization, or especially if you’re an entrepreneurial startup you’ll sooner or later look to conduct a capital raise to fund your business. But where will you look to raise capital? In a “no stone left unturned” approach, one alternative for funding a Small Business that’s frequently ignored is the Family Office. Household Offices run as personal business that handle financial investments and trusts for a high-net-worth household or group of households. They’re usually extremely personal and misconstrued, however if you open the tricks to how Family Offices purchase brand-new endeavors and the requirements they try to find, it could be the secret to funding your organization.
What a Family Office Is
Family Offices are an especially crucial source of capital for small-to-medium-sized companies. According to the Family Office Club, there are presently more than 3,000 household workplaces in the U.S., and these Offices, which normally have a minimum of $100 Million in properties, frequently take a look at alternative financial investment chances– which could be your start-up.
While Family Offices can be evasive and extremely selective, recommendations, relied on networks or entrepreneurship conferences might supply entry. The business looking for financing needs to likewise line up with the Family Office’s Investment Criteria and Philosophy. Numerous have a predisposition to buy business straight or indirectly related to the core organization on which their success is developed.
Positioning of Interests
Eventually, any brand-new financier is banking on both business Plan and the Founder/CEO. On the other hand, the Founder/CEO requires to discover and determine a brand-new financial investment partner who has a long-lasting view and the time and interest to assist move business forward.
If you’re being presented to a Family Office by a monetary company, there can be costs connected with the deal. All financiers will wish to comprehend the exit technique of the financial investment and plainly articulate that it’s crucial.
If a Family Office picks to purchase your service, you might discover that Family Offices:
- Provide extraordinary connections
- Are able to benefit from a circumstance where markets might stop to work in a routine way
- Are more lenient/understanding than Institutional Investors or Private Equity
- Appreciate just how much work needs to go into beginning an effective business
- Serve as coaches
When John Doe * (* Fictitious name to safeguard the person) went looking for seed financiers for his Biotechnology / Pharmaceutical business in Tampa, Florida, he outreached to us at Tip of the Spear Ventures for support. After structuring his effort, we recognized a regional Family Office to pitch. One casual conference with the Private Investment Firm, which handles the wealth of people and their households, was all it required to land his endeavor a high-figure financial investment early in 2018, together with continuous recommendations, client intros, and part-time office.
Such experiences are uncommon, however they do take place, and more Family Wealth-Management Groups are banking on Private Equity offers. There are some downsides: Family Offices can take longer to “Seal the Deal” than conventional Angel Investors or VCs, and they typically have a lower tolerance for Startup failures. Numerous Family Offices take pleasure in recommending and supporting leaders beyond just cutting a check (Plus, they have containers of Dry Powder to pay out!)
How to Find a Family Office
How do you go about discovering a Family Investment Office to back your organization? Not all Family Offices are so called or named, making them hard to identify by means of Web or LinkedIn search. Get to understand who the person is you’re attempting to connect with. It’s often best to let the financial investment neighborhood understand who you are and what your business does prior to you actively trolling for financing.
When you’ve got some leads on Family Offices, call to ask whether they invest in Early-Stage or existing companies, what business their existing portfolio consists of, and what Industries interest them. The truth is, if you had a list of 100 Family Offices and individual contacts at each of them, just 5 or so would be legally interested in straight investing.
As soon as You Find a Family Office … Then What?
Your e-mail ought to be created to get the Family Office’s attention. Keep these preliminary e-mails light … The concept is to prevent frustrating the Family Office and rather fascinate them enough so they desire a follow-up conference. In other words, reveal regard for the truth that these households continuously get tapped for capital, and they’ll be more most likely to invite you into their Family.
Household Offices run as personal business that handle financial investments and trusts for a high-net-worth household or group of households. They’re generally extremely personal and misconstrued, however if you open the tricks to how Family Offices invest in brand-new endeavors and the requirements they look for, it might be the secret to funding your company (See the article I wrote titled “Effect Of COVID-19 On Raising Capital: How To Secure Funding During a Crisis?“).
One casual conference with the Private Investment Firm, which handles the wealth of people and their households, was all it took to land his organization a seven-figure financial investment early in 2018, along with continuous recommendations, client intros, and a part-time workplace area (Sweet!)
SUMMARY
How do you go about discovering a Family Investment Office to back your service? Our advice – Regard the reality that these households continuously get tapped for capital, and they’ll be more most likely to invite you into their “Family.”
Sam Palazzolo
If you/your organization is looking to raise capital, we should talk. Please contact us at info@tipofthespearventures.com.