Raising Capital from a Family Office
I first learned about the term “family office” from my co-founder at Cathedral Leasing. Doug is an extremely well-connected startup founder who had connections all across the U.S. and in particular to a variety of family office contacts in the Southern U.S.
The concept of a family office was not lost on me. However, I had always believed that they were no different than a typical angel investor. Boy, was I wrong.
What is a family office?
The term “family office” can mean a few different things. They were originally set up as private wealth management offices who specialized in managing the financial and investment activities of wealthy families. Think private wealth management but on an even higher level with almost a completely outsourced solution.
A family office isn’t as uncommon as might think. Forbes reported that family offices could be more than $4 million in assets. That capital is believed to be spread across no less than 10,000 family offices worldwide or 6,000 in the U.S. alone.
It isn’t uncommon for a family office to be managed by their own family members. This is especially true for hedge fund managers that have amassed fortunes. In fact, there have been a substantial number of hedge fund managers that have decided to stop investing on behalf of others and simply manage their own wealth. David Tepper, who made his fortune as a hedge fund manager and is the owner of the Carolina Panthers, is the latest in a line of professionals to make this type of move.
Family offices can invest in a wide variety of investment vehicles. In fact, one of the benefits is that there are fewer regulatory requirements about where and how you invest your money since you are simply investing your own. One of those places is the ability to invest in startups.
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