Founders should look for industry alignment when looking for a family office investor

Family offices invest heavily at the beginning of the year. In the first half of 2023, 27% of the startup value comes from deals involving a family office investor, according to a recent report from PwC.

Despite their prevalence in startup deals, family offices can be a mysterious class of investors for founders to navigate, because they are not nearly as public or accessible as VCs. Many family office investors said during the TechCrunch Disrupt panel that the easiest way to connect with investors like them is to look for family offices that align with what the startup is building.

Bruce Lee, founder and CEO of Keebeck Wealth Management, said that if founders want to connect with family offices, they should look for families who made their fortunes in the industry they started.

“[Family offices] you have to look for areas where you feel that you have strengths, or that the family has an edge in certain technologies, so that they can add significant value not only to the discussion, but also to the investment itself,” said Lee.

Eti Lazarian, principal at the Elle Family Office, agreed and added that families want to find businesses that match them.

“If the family invests in something related to the business you’re in, they can bring a lot of profit to your business, as well as collaboration,” said Lazarian. So we usually look for something that complements each other.”

Both Lazarian and Lee added that this alignment is not only related to acquiring family offices, but is also one of the factors that make family offices good investors. Lazarian said family offices tend to invest in companies they care about more emotionally than traditional VCs. He also added that when family offices invest they do so to see the company succeed no matter what, which makes them flexible and patient investors.

“When you work in corporate finance, you feel like you always have a gun to your head that you have to … achieve their goals,” Lazarian said. “When you work with a family office, it’s like the runway is extended. You have plenty of time. It feels like you know you have plenty of air to breathe as you work towards your goals.”

Both Lazarian and Lee added that for founders who want to meet family offices in their industries, industry or regional conferences are a good place to start because family offices often host these events.

Once a founder is connected to a family office, Lazarian and Lee say they should expect to do it differently. While startups can invest VCs in dreams and aspirations, that doesn’t apply to family offices. Companies should make their own predictions and metrics, not that they will be the unicorn of the future.