Tips on raising from family offices
If you're a fund manager or aspiring fund manager, chances are that you're familiar with family offices.
"Family Office" is not a euphemism for the mob. Rather, it's a high-net-worth family that invests it's wealth as an entity. Family offices can span one generations, two generations, twelve generations... you name it.
They invest in a huge variety of asset classes: real estate, precious metals, natural resources, stocks and bonds, and – yoohoo! – venture capital.
The thing about family offices is that they are notoriously hard to find. Why? Because they don't want to get pitched all day every day. Especially if the opportunity being presented doesn't make sense for their particular family office.
So if you're a fund manager looking to raise from family offices, what's the best way to get in touch with them? What's the best way to make a good impression? And what's the best way to keep the relationship strong?
We're gonna dive into all of this today.
But first, meet Dave
Dave Sachse is the founder of his own family's family office, Sachse Family Fund. He's also the founder of Family VC – a community of over 100 investment entities (mostly family offices) that share education, resources, tips, and strategies.
Dave is also a good friend of the Hustle Fund team. And a few weeks ago he was generous enough to share candid insights into the inner workings of family offices.
I know. He's too nice.
Getting on their radar
First thing to do to get in touch with a family office: make sure you're approaching the right person.
Just like in a regular business, different people in a family office focus on different things. One might focus on investing in stocks, another in real estate, another in equity.
Once you find the right person, go through their preferred process. For some family offices, that means submitting a form on their website.
Now, a lot of VCs don't want to submit a form on a website because it doesn't feel personal. Or because they're worried the form is just a black hole and no one will see their message.
Here's the thing. A family office investor's inbox is slammed. They get pitched all day every day (sound familiar?). It can take them weeks or even months to respond to an inbound inquiry.
If they're late to reply to you, it doesn't mean that they're not interested. It just means they have approximately one bajillion other things going on. And many of those things are more urgent (to them) than you.
Here's the other thing. Many family offices don't have someone working on their equity investments full time. So not only are they swamped with other things, they also aren't focusing their attention on this for 40+ hours a week.
All that to say – they have their processes in place for a reason. A form on their website probably leads to a spreadsheet that they can review when they're ready to give you their full attention... without you getting lost in the shuffle.
So just fill out the dang form.
Your the first call with the family office
Tip #1: treat them like humans
Family offices are accustomed to being asked for money. Often in ways that feel transactional.
This means that most family office investors have one thought running through their heads every time they get pitched: "how big is the ask and when is it coming?"
If you want to establish yourself as someone a family office wants to work with, don't go into your first call with them with a transactional mindset.
Instead, treat them like humans. Build a relationship, get to know them, demonstrate your character.
Tip #2: find out their "why"
Yes, every investor is looking for returns. But there are many other asset classes that could help them achieve that goal. So find out: why equity?
Maybe it's to diversify their portfolio. Maybe it's to better support the other companies they're operating. Maybe it's because they're passionate about an industry. Or they're super interested in learning about startups.
Once you find out their why, you can better align your mission with theirs.
Tip #3: ask about their process
Before you end the call, ask the investor about their process moving forward. What information are they looking for? How do decisions get made?
If the family office doesn't seem to have a clear process, Dave recommends putting them in your long-term funnel. Those offices tend to move s l o w l y.
A good follow-up strategy for that kind of family office is to ask if you can include them in your LP update newsletter. Then, you know, actually send update emails.
How to follow-up without being terrible
First rule of not making everyone hate you: give the family office time to reply before following up. Following up a day or two after an email with "just pushing this to the top of your inbox" is a good way to turn off the investor.
Also to avoid: hitting them up on multiple channels. If they haven't responded yet to your email, please don't message them on LinkedIn, Whatsapp, and Twitter.
It's super annoying. It also gives the impression that you're desperate (not a good look) and will mostly serve to make them feel guilty. They know they owe you a response. Chill.
Wait at least 5 days before you follow up. Then, when you do follow up, put some meat on the bones of that email.
Include info that shows off your skills as an investor. Something like:
"Hey hey, just checking in with some updates on the fund. We invested in this great company, or we just lined up a new LP, or we just published this blog post on our thesis, or we have a close coming up" will serve as a reminder to respond to you. It'll also show you and your fund in the best light.
How to make family offices love you
Two tips to keep in mind – before or after they invest in your fund.
Tip #1: don't gatekeep
If a family office asks for an intro to an investor, do it. If they ask to meet a founder, help them out. If they ask for a recommendation to an industry partner, make one.
Gatekeeping is a huge red flag for family offices. It doesn't only make you appear mean-spirited, it also shows a lack of confidence in your own skills and network.
Open doors for them and they're more likely to open doors for you.
Tip #2: make it easy for them to champion you to the rest of the family
There are a few ways to do this.
First, show off your skills as an investor. Tell them about your portfolio companies, share updates about your team, share what you're doing to increase dealflow, and offer insights on trends in the industry. You could even offer to do deal analysis on an investment that you aren't involved in, if it would help the family office out.
Secondly, stay in touch regularly. Send monthly update emails, and invite them to events you're going to (or hosting).
All of these things will set you apart from the crowd, and will make it easy for your point of contact to be your champion for the rest of the family office.
More from Dave
Want more tips on raising from family offices? The conversation with Dave covered topics that I didn't summarize here. Watch the interview here (fast-forward to 1:42:00) to get those insights.