Family offices have unique advantages over other investors. “There is a unique quality to permanent capital, ” J.B. Pritzker, Co-Founder and Managing Partner of Pritzker Group, said in a private breakfast for 80 family offices and venture firms, in a fireside chat with Esther Dyson, hosted by Alpha Venture Partners.
“It does mean that in certain situations,family offices or permanent capital can stick it out longer or see an opportunity though longer and might, therefore, be the winner where others have a much shorter point of view.”
Pritzker continued to share a personal case study, in which Pritzker Group made a first round venture investment in a company that quickly proved to be very successful. PGVC ended up buying the majority stake in the company.
“This company is doing extraordinarily well. It cashflows. It is continuing to grow. I am not sure why I would not want to own this for a long period of time,” Pritzker said. “No other venture investor would do that. They would immediately take it public or sell it. That is where being a long term investor has its advantages.“
But not all family offices can source the best deals
Acccording to Stephen Cambell and David Bailin of Wealthmanagement.com, “Family offices and their foundations often lack self-awareness as to the strengths and weaknesses of their investment process and staffing.”
A 2008 study suggest that 25 percent to 35 percent of family offices acknowledge that they lack the necessary staffing and skills to properly manage their investments. Another study by Family Wealth Alliance reported in late 2009 that 58.8% of Single Family Offices were somewhat concerned about their long-term sustainability. With Family offices with less than $100 million in assets, that number rose to 83 percent.
It is important for family offices to make good use of their unique advantages by partnering with GPs that can source top decile growth stage investments.
Alpha Venture Partners is a GP that uniquely delivers private access to the best growth companies’ later stage investment rounds. Learn more in the video.
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03 Advantages of Family Offices as Investors from brian smiga on Vimeo.