Family offices invest significant capital in startups each year. In the first half of 2023, 27% of the overall value of startup deals came from deals that included a family office investor, according to a recent PwC report.
Despite their dominance in startup deals, family offices can be a mysterious class of investors for founders because they are not as public or as easy to find as venture capital firms. Several family office investors said during a TechCrunch Disrupt panel that the easiest way to approach investors like them is to look for family offices that match what a startup is building.
Bruce Lee, founder and CEO of Keebeck Wealth Management, said that when founders are looking to connect with family offices, they should look for families who have built their wealth in the industry the startup is building in.
“(Family offices) need to kind of look for areas where you feel like you have an advantage, or the family has an advantage in a particular technology, so that you can add strategic value not only to the conversation, but also to the investment itself,” Lee said.
Eti Lazarian, director of the Elle Family Office, agrees and adds that families want to find businesses that complement their own.
“When a family invests in something that has to do with the business they work in, they can bring a lot of value to your business, as well as collaboration,” Lazarian said. “So we’re usually looking for something that can complement each other.”
Lazarian and Lee added that this alignment is not only related to finding family offices, but is also one of the elements that makes family offices good investors. Lazarian said family offices tend to invest in companies they care about emotionally, compared to traditional venture capital firms. She added that when family offices invest, they do so to see a company succeed no matter what, which can make them more flexible and patient investors.
“When you work with venture capitalists, you always feel like you have a gun to your head and you have to…achieve their goals,” Lazarian said. “When you work with a family office, you feel like the runway is longer. You have more time. It’s like you know you have more air to breathe as you work towards your goals.
Lazarian and Lee added that for founders looking to meet family offices in their respective industries, industry or regional conferences are a great place to start, as family offices frequent these events.
Once a founder is connected to a family office, Lazarian and Lee said they should expect to present them differently. While startups can pitch their dreams and aspirations to venture capitalists, this doesn’t work with family offices. Companies should present their projections and indicators, without claiming that they will be a future unicorn.