Understanding family offices
People who are worth more than one billion USD typically have a family office. It can be a single family office working for one beneficiary owner only, or a shared family office working for several families/persons. The role of the owners can vary strongly: Some family offices do little more than paperwork, others work like full-fledged private equity companies, with the owner(s) only being involved in strategy.
Pros of family offices
Family offices can be great startup investors. Especially if the owner is emotionally involved and likes what you are doing they can be super visionary and loyal. Last but not least, some family offices have the financial means to follow up in subsequent rounds up to IPO.
Cons of family offices
The big advantage of family offices – loyalty and emotional attachment – can also play out the other way out. In case trust is lost a family office can let you down, even if this may be irrational from a pure financial perspective. Besides, family offices are notoriously difficult to find; some of them don’t even have a website. So getting access to the right persons can be challenging.
Recommendation: Should you get money from family offices?
Selected family offices should be on the long list of every startup financing round – whether a startup is in (pre) seed or in later stage.
But of course you will want to compare family offices with other potential financing sources. Phase 6c describes the different options in detail.