How to Get Family Offices to Invest in Your Emerging Venture Capital Fund
May 27. 2021
Established VCs Rule the Startup Funding Space
The past few decades have seen venture capital funds become almost ubiquitous in the startup sector. Since 2011, the dollar value of capital invested annually grew incrementally, until it peaked at slightly above $300 billion in 2018.
While the numbers speak to the power of established VCs in the startup funding sector, they have also perpetuated a myth that VC is the primary source of funding for startups. According to this Harvard Business Review article, “venture capital financing is the exception, not the norm, among start-ups.”
Family offices and high-net-worth individuals (HNWIs) are among non-VC startup funding sources whose significance is growing by the day. As a matter of fact, HNWIs (also called angel investors) fund more early-stage companies than VCs, by 16 to 1.
Yet VCs continue to monopolize the headlines in the startup funding space. The main reason for the ubiquity could be that VCs are more visible and easily accessible. VCs have great organizational representation such as the National Venture Capital Association (NVCA). The NVCA produces annual reports, such as the NVCA Yearbook, that highlight recent developments in the space.
Family Offices Are A Great Alternative for Startup Funding
Nonetheless, the non-VC funders are reachable, only if you know how to do it. Family offices, for instance, have been working hard to lay their intentions bare. The institutions have increased their participation in new ventures, and they are getting the much-needed media attention. Here is how to get the family offices to invest in your venture capital fund.