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A family office is a private company, generally structured as an LLC, that manages the assets for wealthy families. How wealthy? The wealth of these families tends to be over $100 million. Yes – we are talking about seriously wealthy families. Just maintaining a family office is not cheap, generally over $1 million and often tens of millions of dollars. Given the amount of money they have to invest, if you a startup or other high growth small business, family offices represent a potential funding source for you.
The early model for what are known today as family offices was established by John D. Rockefeller in the late 1800′s to manage his family’s wealth. In a family office, the company is managing a family’s wealth which is often the result of generations of family wealth being accumulated. Recently, given the cost of managing a family office (and partially as a result of the recession), family offices have combined into what are called multi-family offices.
Whether a single family office or multi-family office, they manage a variety of services for a wealthy family including success planning, philanthropy efforts, and legal affairs amongst others. However, one of the primary roles of a family office is managing the investments of the family. And although this generally includes what one would think of as more traditional investments, i.e. equities, fixed income instruments, commodities, etc, family offices can and do invest in private companies.
Family offices are generally less public about their investment activity and their existence at all preferring to keep a lower profile in contrast to super angels, venture capitalists or angel investors. They often do not have websites and are not out and about at “pitch events” but remember, with wealth in excess of $100 million and an eye towards diversifying their investment portfolio, they may be another source of funding for your startup or small business.
So how do you find family offices? It’s not easy given their penchant for privacy, but like getting to VCs, angels or other funding sources, it’s largely a networking game albeit a bit more difficult. Of course, we’d recommend going through our Funding Recommendation Engine as in addition to VCs, angel investors, government grant programs, we’ll highlight family offices for you as well. And if you made it this far in this post, here is one family office you may want to research (especially education startups) – Palm Ventures (it’s not a VC).