COPENHAGEN, DENMARK / ACCESSWIRE / March 30, 2023 / Simple, the global insights and knowledge platform for private wealth owners and family offices, has released its first review of venture capital for family offices amidst recent turmoil in the venture capital space. The collapse of Silicon Valley Bank (SVB), a major player in the venture capital sector and the prevailing high-interest rate environment has created a climate of market uncertainty, prompting investors to reassess their strategies.
Despite these challenges, family offices continue to seek out venture investments for the returns not readily available in other asset classes, while being aware of the associated risks. Family offices are significant players in venture investing and have the capacity to be ideal VC partners with startup firms, providing not only capital but also mentoring and support in areas such as business development. In light of the current uncertainties, the role of family offices in the VC ecosystem becomes even more crucial.
In this review, the Simple team explores the venture capital landscape through a family office lens, to examine what they bring to the VC table, what function venture investments have in a family office portfolio, and what paths family offices take to achieve their desired exposure to the asset class.
The key takeouts from this review include:
1. Access is key.
It takes years and deep networks to gain a position in developed VC ecosystems. When deciding which investment model to follow for exposure, family offices must determine if their network can provide the right opportunities and risk management. If not, they might be best served, at least initially, by investing through VC funds, before making co-investments and eventually investing in a fund's general partnership to gain experience, expand their network, and gain a presence in their targeted VC ecosystem.
2. Co-investments with funds can lead to pre-vetted investments that potentially offer strong value propositions.
Co-investments offer greater opportunities than simply buying into the main investment pool. Additionally, family offices can invest in a fund's general partnership, gaining a management seat to increase their total venture capital allocation and target specific sectors.
3. The relationship between venture capital and private equity investments in a family office portfolio.
Family offices view venture capital and private equity investments as a continuum in their allocation of alternative assets within their portfolio. The amount invested, timeframe, and potential returns are all factors that lean towards the long-term, creating a spectrum of considerations at every stage of a company's growth.
4. The difficulties surrounding venture investments
Managing VC investments in the years after they are made can be difficult due to illiquidity, long time horizons, and the need to account for the value of the investments. Managing liquidity in VC investments involves a laddered approach, but this does not account for risk.
According to Simple founder, Francois Botha:
"With market uncertainties heightening the complexities of VC investments, family offices demonstrate resilience by leveraging co-investments alongside established funds, accessing pre-vetted opportunities and effectively managing the risks involved. In this review, Simple examines just how valuable family offices are in the VC landscape, offering startups so much more than just capital."
The review is produced by Simple's internal research team along with input from selected industry leaders, family offices and members of Simple's expert network.
The review is available to Simple platform users and registration for an account is free.
About Simple
Simple is a next-generation insights lab focused on helping family offices and private investors to professionalise and be future-fit. We publish cutting-edge insights and reviews which are co-created with our global network of experts.
These insights range from entry-level questions such as "What is a family office" to more specific matters relating to operations, technology and infrastructure. The membership platform provides access to ready-to-use content, as well as a global expert community.
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CONTACT:
Francois Botha
Phone Number: +45 25 64 04 38
Email: hi@andsimple.co
SOURCE: Simple
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https://www.accesswire.com/746660/Simple-Releases-Review-of-Venture-Capital-for-Family-Offices-2023
