The Family Office Profile

So, what is a Family Office?

Behind a Family Office is private wealth belonging to a family. In many cases, that wealth was built over decades, or generations, through entrepreneurship, the growth or sale of a family business, or a long-standing industrial activity.

Once substantial wealth has been created, the question becomes how to manage, preserve and invest it for the future.

Some families mainly invest through banks, public markets, real estate or investment funds. Others choose to manage part of their wealth more directly and may invest in private companies, startups or scale-ups.

A Family Office is the organisation or structure through which a family manages these financial interests and investments.

This also explains why Family Offices can be less visible to founders than Venture Capital funds.

Investing in startups is not necessarily their only or even their main activity. They may not actively market themselves to founders, may invest through personal or trusted networks, and their investment strategy can be closely linked to the interests, expertise and history of the family behind the capital.

For a founder, that makes them an interesting but sometimes less obvious part of the investor landscape.

How is a family office organised?

The term Family Office covers different structures.

• A Single Family Office (SFO) serves one family.

• A Multi-Family Office (MFO) serves several unrelated families. Some Multi-Family Offices developed from Single Family Offices that expanded their services to other families, while others operate as third-party wealth management organisations.

Other structures and variations exist as well, making the Family Office landscape particularly diverse.

For founders, knowing that an investor is a Family Office therefore tells you only part of the story.

The relevant question is not simply:

Does this Family Office invest in science startups?

but:

What type of Family Office is it, and how does it invest?

What may shape how a Family Office invests?

There is no single Family office investment model.

Some invest primarily in traditional asset classes and allocate only a small part of their portfolio to startups or venture investments.

Others have built dedicated investment teams and operate in a way that can look quite similar to a Venture Capital fund.

Some invest directly in companies, while others invest through VC funds, syndicates or co-investment structures.

Their investment approach may be shaped by several factors:

• the origin of the family wealth

• The family's entrepreneurial or industrial background

• sector expertise and personal interests

• the generation currently managing the wealth

• the size and professionalisation of the Family Office

• the balance between wealth preservation and wealth creation

• the family's appetite for risk

• the level of involvement the family wants to have in its investments

This diversity is exactly why founders should avoid treating “Family Office” as one investor profile.

Two Family Offices may look similar from the outside and have completely different investment strategies.

Why can Family Offices be interesting for founders?

One potential difference lies in the source of capital.

A traditional VC fund generally operates within a defined fund structure, investment period and expected fund lifecycle.

A Family Office investing its own capital may have more flexibility.

This can sometimes translate into a longer investment horizon, which may be particularly relevant for companies where value creation takes time.

For deep tech, life sciences, industrial innovation and other research-driven companies, this can be interesting. These companies may face longer development cycles, regulatory pathways, industrial validation or significant capital requirements before reaching scale.

But founders should not automatically assume that every Family Office is patient capital.

Some have very clear return expectations, investment periods and exit ambitions. Others may be much more flexible.

Again, the individual investment strategy matters more than the label.

More than capital?

The origin of the family wealth can sometimes be particularly relevant.

A family whose wealth was created in manufacturing, food, logistics, healthcare, real estate or another industry may bring more than financial capital to an investment in that sector.

They may have:

• industry knowledge

• operational experience

• relevant networks

• access to potential customers or partners

• experience building companies over several generations

For the right startup, this can create a form of smart capital that is very different from purely financial investment.

But sector heritage does not automatically mean strategic involvement.

Some families deliberately keep their investment activities separate from the operating business. Others actively use their network and expertise.

Founders therefore need to understand what involvement actually looks like in practice.

How are decisions made?

This is another area where Family offices can differ significantly.

In some Family Offices, investment decisions remain very close to the family itself.

In others, a professional investment team sources opportunities, conducts due diligence and makes or prepares investment decisions.

The decision-making process can therefore range from relatively personal and entrepreneurial to highly institutionalised. For founders, it is useful to understand: Who is actually making the investment decision?

-              Is it the family principal?

-              A next-generation family member?

-              An investment manager?

-              An investment committee?

-              Or a combination of these?

What should founders look at?

Before approaching a Family Office, founders should try to understand more than whether it has invested in startups before.

Look at questions such as:

-              Which sectors and stages do they invest in?

-              Do they invest directly or mainly through funds?

-              What is their typical ticket size?

-              Do they reserve capital for follow-on rounds?

-              How long do they typically remain invested?

-              How involved do they want to be?

-              Do they lead rounds or prefer to co-invest?

-              What expertise or network can they bring?

-              What does their existing portfolio tell you about their strategy?

And perhaps most importantly: Why would this particular Family Office be interested in your company?

The founder perspective

A Family Office can potentially combine characteristics founders often look for in an investor: capital, entrepreneurial experience, sector knowledge, networks and a longer-term perspective.

But none of these should be assumed simply because the investor carries the Family Office label. That is perhaps the most important takeaway.

“Family Office “ describes where the capital comes from more than it tells you how the investor will behave.

For founders, the real work starts one level deeper.

-              Understand the family behind the capital.

-              Understand how the wealth was created.

-              Understand the investment strategy.

-              Understand who makes the decisions.

And understand what role they want to play after the investment.

Because ultimately, the question is not whether a Family Office is a good investor.

The question is whether this Family Office is the right investor for the company you are building.

Last chapter next week:  The strategic investor