Family offices are a distinct and unique type of institutional investor. Tasked with managing wealth across generations, these entities strike a balance between protecting capital and driving growth. Unlike larger institutional investors such as pension funds or endowments, family offices enjoy the flexibility and independence to make decisions that align with their values and specific goals.
A key feature of family offices is their focused, efficient approach to due diligence. While they share a commitment to thorough evaluation, their processes tend to be more streamlined compared to those of bigger institutions. This allows them to make faster, more tailored decisions, making family offices an attractive partner for emerging managers, especially those seeking smaller investments or quicker commitments.
The Family Office Due Diligence Process
The due diligence process for family offices typically begins long before the first conversation with a potential manager. Many family offices rely on their internal expertise to proactively vet investment opportunities. This means they gather key information—such as a manager's track record, personal references, and market reputation—on their own. By the time they reach out to a manager, they've often done considerable legwork, eliminating the need for lengthy questionnaires or traditional checklists.
Calls with family offices are typically short, lasting 10 to 20 minutes. These conversations focus on strategic fit and alignment rather than process details. Managers can expect to discuss their investment philosophy, market perspective, and what sets them apart from others. This approach enables family offices to quickly assess whether a manager's approach aligns with their objectives.
The decision-making process typically unfolds over several months, with family offices reaching out for additional information via email or follow-up calls. Generally, only three to four calls are needed to make a decision. Unlike larger institutions, family offices don't rely on extensive committee approvals or multi-layered processes. When they're satisfied with a manager's credentials, they can move forward with investments quickly.
Why Family Offices Are Great Partners for Emerging Managers
Family offices are an ideal choice for emerging managers. Their leaner due diligence processes and flexibility make them a perfect fit for managers seeking quicker engagements and smaller allocations.
One of the most significant advantages of working with family offices is their ability to avoid bureaucratic delays. Unlike pension funds or foundations, which may take a year or more to complete due diligence, family offices can make decisions in just a few months. This speed is particularly beneficial for managers who are early in their fundraising, where timing is crucial.
Family offices also prioritize alignment over scale. They are more interested in managers whose strategies resonate with their values—whether it's sustainability, innovation, or niche markets—than in managers with a long track record or massive portfolios. This means emerging managers can stand out by focusing on areas that are meaningful to the family office, even if they don't yet have institutional scale.
Additionally, family offices offer the chance for long-term partnerships. With their multigenerational outlook, family offices view investments as part of an ongoing relationship, not just a one-time transaction. Managers who align with the family office's values can benefit from repeat investments and strategic support over the years.
Challenges and Considerations
While family offices offer great potential, their highly selective nature means that managers must demonstrate clear value and strategic alignment to earn the trust of their clients. Unlike standardized institutional investors, family offices often have tailored criteria that can vary significantly across different entities. Emerging managers need detailed examples of past and future investments, case studies, and well-written quarterly letters and investment memos to share with family offices during the due diligence process.
Family offices also prefer concise, focused interactions. Calls and presentations should emphasize high-level strategy, key differentiators, and alignment with the family office's goals. Managers must be prepared to adapt their pitch to fit the family office's style and preferences.
Lastly, while family offices are known for their agility, they are deliberate in their decision-making. Building trust and aligning on strategy can take months, so managers must be patient and persistent in their approach. Success often comes down to consistently delivering clear, relevant information over time without overwhelming the family office team. It generally takes three to five months to finalize a seed transaction with a family office.
A Strategic Option for Emerging Managers
Family offices on the Ashton Global platform provide emerging managers with a valuable opportunity to secure capital and establish long-term, strategic partnerships. Their streamlined due diligence process, flexibility, and focus on alignment make them an ideal choice for managers seeking smaller investments or faster decision-making. For managers willing to navigate the selective nature of family offices, these investors can offer not only financial support but also the potential for deep, long-term partnerships.
By understanding the unique dynamics of family office investing, emerging managers can leverage the flexibility and resources these investors offer, positioning themselves for mutual success.
