Direct investing in startups is becoming increasingly appealing to family offices. But venture capital is a risky game. On average, three in four venture capital-backed companies in the U.S. fail to return investors’ capital, according to a Wall Street Journal article.
Most family offices favor late-stage or pre-IPO companies over early-stage startups. “Early-stage venture capital is more than a full-time job. It involves getting side by side with managers and entrepreneurs to help grow the business,” said Prateek Mehrotra, chief investment officer at Endowment Wealth Management, a multi-family office with indirect venture capital investments through single-family office clients. Mehrotra said while many family offices have the capital to invest, they are not equipped with enough staff to perform due diligence and get involved throughout a startup’s development.
In some cases, family offices naturally have an advantageous position when a startup’s business matches their expertise in certain sector. “We are particularly interested in special situations where we have a competitive advantage. While these deals are research-intensive and highly illiquid, they are also the opportunities that can deliver outsized returns,” said Andrew Eberhart, chief investment office at a prestigious single-family office located in Virginia, in a November 2015 interview.
Trusted Insight identified 20 single-family offices that are highly active in venture capital investing. Just as you might expect, almost half are located in Silicon Valley.
Pfäffikon, Switzerland
Family Represented: Klaus Tschira Family
Recent VC Investments: Jiff, Curetis
Palo Alto, California
Family Represented: Jerry Yang
Recent VC Investments: Ozlo, Citrine Informatics, WEVR
Los Altos, California
Family Represented: Sergey Brin
New York, New York
Family Represented: The Berggruen Family
Recent VC Investments: The Dodo, Ezetap
Kirkland, Washington
Family Represented: Bill Gates Family
Recent VC Investments: Owl Ventures
Palo Alto, California
Family Represented: Jeff Skoll
Recent VC Investments: Rayvio, Paga, Ezetap
Palo Alto, California
Family Represented: The Cha Family
Stratford, Connecticut
Family Represented: The Daher Family
Recent VC Investments: Adomic, All Day, Bark & Co, Browz
Munich, Germany
Family Represented: The Strascheg Family
San Francisco, California
Family Represented: Warren Bechtel Family
Palo Alto, California
Family Represented: Eric Schmidt
Hong Kong, China
Family Represented: Li-Ka Shing
Recent VC Investments: Student.com, ROLI, Friendsurance
Philadelphia, Pennsylvania
Family Represented: Mike Kane
Recent VC Investments: HealthQX, PharmMD, Versify
Bryn Mawr, Pennsylvania
Family Represented: Clay W. Hamlin and Lynn B. Hamlin Family
Recent VC Investments: fund related to late-stage healthcare ventures
New York, New York
Family Represented: The Wertheimer Family
Recent VC Investments: Paddle8, WHOOP, HookLogic
New York, New York
Family Represented: Michael Del Family
Recent VC Investments: DentalOne Partners, Kobalt
Chicago, Illinois / Los Angeles, California
Family Represented: The Pritzker family
Recent VC Investments: SMS Assist, Baselayer, AiCure
San Francisco, California
Family Represented: Nicholas Pritzker
Recent VC Investments: Enlighted, Powerhive, Tesla
Pittsburgh, Pennsylvania
Family Represented: The Hillman Company
Recent VC Investments: Redfin
Seattle, Washington / Palo Alto, California
Family Represented: Paul Allen
Recent VC Investments: 4Info, Alibaba Group, Spotify
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