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Raising Capital From Single Family Offices

Forbes Insights

The Little Black Book of Billionaire Secrets
 
Russ Alan Prince
CONTRIBUTOR

Single-family offices generally allocate considerable sums on behalf of the wealthy families that established them. These boutique money management firms are constantly in search of solid investment opportunities.
The investment professionals at single-family offices, for example, are inclined to give monies to seasoned investment advisors with whom they have established relationships. According to Andy Tarquinio, a partner at Grant Thornton LLP, “If a single-family office has had a good experience investing with a manager, that manager is likely to be given more money to invest.”
Many single-family offices are interested in funding businesses directly. For them, a significant trend is club deals. Here, single-family offices as well as wealthy individuals co-invest with each other in attractive companies.
From the perspectives of money managers and entrepreneurs, starting a relationship with a single-family office tends to be the real complication. Reaching single-family offices is often difficult, frequently by design.
If you want to raise monies from single-family offices, the key lies in the fact that many of them operate within an ecosystem of overlapping professionals. For example, seven out of ten single-family offices cite referrals from professionals, such as accountants and attorneys, as being a very important means of sourcing new investment opportunities.
In order to maximize the possibility of getting introductions to single-family offices from these other professionals, you must understand the motivations of the referring professional. According Brett Van Bortel, Director of Consulting Services for Invesco Consulting, with respect to money managers, “There is a highly systematic process developed by Invesco Consulting that can be used to cultivate strategic partnerships with non-competing professionals, generating astounding amounts of new business. The critical trait of the successful advisor is to clearly understand the work involved, follow the implementation process and persevere thru adversity.
Not only do the executives at single-family offices look to the various professionals they employ for quality introductions to money managers and direct company investment opportunities; they also often leverage their extensive network of peers. This is commonly done by networking at industry conferences as well as in informal settings.
Single-family offices, because they’re rapidly growing in number and the amount of money each one is managing, are becoming an ever more important source of capital. Only those money managers who are quite good at their jobs, and those entrepreneurs with solid business possibilities, who are also able to generate introductions from other professionals, are likely to effectively tap into this enormous and expanding pool of capital.

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