Friday, August 21, 2020

"6 Family Office Trends In Direct And Venture Capital Investment"

From Forbes, August 20:
Over the past decade, family offices have become a significant driving force in global investment and innovation. Despite uncertainties caused by the COVID-19 pandemic and the threat of an encroaching global recession, family offices remain cautiously optimistic about investing.
Two recently released reports, one by Campden Wealth and the other by FINTRX in partnership with Charles Schwab both examine recent global trends in family office investment. Here is a look at their key findings.

1. More family offices going direct
As family offices have grown in sophistication over the past decade, interest in direct investment opportunities has been increasingly noted. Family office direct investment trends can be attributed to several factors including the accumulation of assets and talent required to effect such investments on the single family office's behalf, more robust networks, as well as the greater control and decision-making ability, as well as better value and interest alignment and returns that these deals afford.

Both the Campden and FINTRX reports indicate continuations in this trend despite notable barriers, including increased competition and high valuations. Campden's data shows that 76% of family offices surveyed invest directly in companies, with 26% sourcing opportunities themselves.
FINTRX, drawing information from various sources including public filings, proprietary data sources, strategic industry relationships and data mapping, then harvested their data using multifaceted, bottom up methodology.

Their findings show that eighty-three percent of single family offices worldwide consider investing directly, while only thirty percent of their multi-family office counterparts do the same.

2. Rising venture capital investment
Campden Wealth Research shows that based on strong historical returns, family offices have increasingly allocated capital to venture and developing in-house venture investment capabilities over the past decade.
Of the 110 representatives of ultra-high net worth (UHNW) families surveyed, venture investments constituted, on average, 10% of their overall portfolios, divided between direct investments (54% of the average VC portfolio) and funds (46%).

3.Early-stage venture is preferred....