Over the years, our firm has had countless conversations with private equity and venture capital investors. Discussions with this cohort, some of whom are clients and others we invest alongside, are invaluable to our firm as we work to remain at the forefront of an ever-changing investment landscape.
One comment by a seasoned private equity professional stood out:
“I already know the large technology investors, funds, and companies. I can access them. What is valuable to me is having exposure to the opportunities that wouldn’t normally come across my desk: newer, bespoke funds and investments.”
This professional’s firm is widely known, has raised billions of dollars through multiple funds, and is a major investor in both early stage and later stage tech companies. Yet, given the size of the investments made through the firm, this professional’s personal investing centers on finding niche investments: those that aren’t on everyone’s radar.
This investment strategy is where a family office comes into play and provides a window into our investing mindset at Boston Family Advisors.
The term “family office” can be confusing for one simple reason: there is no standard template for how family offices operate. No two families are alike, and therefore, no two family offices are, either. What one family desires could be, and in most cases is, completely different than the next.
That said, family offices generally share a unique feature: best-in-class outsourcing. Family offices are private advisory firms that deliver a fully outsourced solution to manage the entire scope of services required by a family or individual. The goal is to deliver the best services for the lowest cost. Further, unlike traditional wealth managers, where clients are charged a standard percentage of assets under management, a family office is structured differently and is not focused solely on the public markets. Multi-family offices operate in a similar way, except they have the benefit of economies of scale and cost sharing among a small number of families or individuals. This means multi-family offices can offer clients a single-family office experience at a fraction of the cost.
At Boston Family Advisors, we build and operate single-family offices for venture capital and private equity professionals, and entrepreneurs. Each of our family offices operates independently yet is part of an exclusive ecosystem that leverages each other’s knowledge, experience, and expertise. This environment brings unparalleled benefits, especially when it comes to investing.
With over twenty families and individuals, we source investment opportunities via our clients and through our network. When we identify an opportunity that is noteworthy, we engage our families to assess their interest and make sure that the investment fits with their existing portfolios and their overall investment goals and objectives. Our clients, who in many cases are prolific investors themselves, frequently offer insights and experience that further add to the investment analysis. For VCs, this can mean recommendations on opportunity analysis, deal terms, and operational advice. For startups, we often gain referrals, connections, and business model evaluation.
Our clients are looking for ways to actively participate in important future trends in technology and help fund the application of tech advances in a variety of industries. This means investing in both direct venture rounds and via funds.
Common investing themes among our clients include:
1. Managers who have split off from a seasoned fund, forming a first-time fund
2. Funds that are raising less than $250 million
3. Former operators as GPs
4. Direct early-stage tech deals
Many clients are especially excited about early-stage investing given the current market dynamics. This sentiment is supported by those who have helped build companies in a range of economic climates: “I believe this could be the best venture vintage in decades,” says John Harthorne, Founder and Managing Director of Two Lanterns Venture Partners and the Founder of MassChallenge. “The costs for startups
are significantly lower and talent is more available during periods of disruption.”
“Startups are more nimble than corporations and better able to take advantage of rapid changes in markets to create and capture new upside,” Harthorne continues. “These cycles have historically produced more highly successful startups and more highly successful venture funds.”