Family offices: An enticing investment opportunity?

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Family offices are private wealth management vehicles which have been set up by families in the high net worth bracket. Why are they relevant at this point in time? Because they are acting as a key venture capital provider for the wave of European start-ups currently setting up shop.

It can bring rewards to back early stage businesses – this might be reflected best by estimates which put the amount held by family offices around the world at over $3 trillion. If you are interested in investing in the family offices sector, consider a little more information on the industry’s background and current position.

This is a sector which has undergone an image change over the past few years – the explosion in tech start-ups has gone hand in hand with a new wave of family office operatives who have taken the reigns from their parents, and are themselves more tech savvy than previous generations.

So why have some of the exciting start-ups in Europe turned to the family office sector when it comes to funding? The answer might lie in the apparent lack of it. Commentators have highlighted the difference between the money available for US start-ups and their European counterparts – US tech start-ups see significantly more funding made available to them.

What can they offer?

Family offices can typically offer access to a valued network of associates, and also a lower entry point in terms of an initial investment into venture capital. The relationship between family offices and tech start-ups has been strengthened by the apparent improved acceptance of the disruptive business models associated with the tech sector.

Gérard Cohen, the noted Monaco-based private banker, commented: “The expected steady growth in the European tech sector means that funding is a non-negotiable requirement for start-ups looking to make head way. We have seen family offices become one of the backbones behind the growth of fledgling tech companies, and along with angel investors and corporates, they can provide the financial impetus for Europe to close the gap with the US when it comes to the development of the sector.”

Family offices could be a catalyst for a change of attitude towards the very fabric of entrepreneurship in Europe – risk is becoming a more accepted element of backing tech start ups in the continent, in the knowledge that failure happens but that bright ideas often come to fruition in the long run.

Photo: © chika_milan / Adobe Stock

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