How to Effectively Engage with Family Offices

How to Effectively Engage with Family Offices

Starting an investment fund can be an intense and arduous process. Emerging managers can face a steep learning curve when it comes to navigating relationships with investors, particularly family offices. While family offices can be valuable partners, understanding their priorities and investment goals can be challenging. Our consultants help managers to engage with family offices, including advice on what strategies they're looking for, how to present your firm, and best practices for building effective relationships.

A clear and compelling investment strategy

As an emerging manager, it's important to recognize that family offices are typically focused on long-term growth and preservation of capital, minimizing risk, and maintaining a high level of engagement. 

Family offices are looking for investment opportunities that align with their goals and values. This means that emerging managers need to have a well-defined investment strategy that is clearly communicated and supported by robust data. Be sure to articulate your approach to risk management, including how you identify and mitigate risks.

Demonstrate a track record of success

While emerging managers may not have a long history of performance to draw on, there are still ways to demonstrate your ability to generate returns. Consider providing examples of investments you've made in the past and how they've performed. Even if you don't have a significant track record, you can still highlight your expertise in a particular industry or geographic region. Throughout the fundraising process capital providers will need to assess if your strategy is sustainable and can endure through market cycles.

Leverage your network

Family offices often rely on referrals and recommendations from trusted sources when evaluating investment opportunities. As an emerging manager, take advantage of your personal and professional networks to build relationships with family offices. Attend industry conferences and events, and seek out opportunities to connect with potential investors. By engaging with your network, a new manager should be able to close roughly 20% of their LP calls into fund investments.

Build trust through transparency and communication

Successful partnerships are built on trust, and trust is grounded in transparency and communication. Be upfront about the risks associated with your investment strategy, and provide regular updates on performance and market conditions. Quarterly and monthly letters are very valuable for institutional investors to understand how a manager thinks and views the world. 

Finally, it's important to recognize that family offices have specific requirements around investment minimums, fee structures, and reporting. As an emerging manager, you may need to be flexible in order to accommodate these needs to secure a seed or anchor investment.