How Family Offices Source Direct Investments
In a narrated explainer, Richard C. Wilson outlines ways family offices can find companies for direct investment.
Richard C. Wilson explains how family offices can find direct investment opportunities. The video moves from the sourcing challenge to a range of channels, then places sourcing within a wider process of assessing a company and its founder, completing due diligence, negotiating terms, and managing an investment through exit. Its focus stays on how opportunities enter a family's pipeline.
In this video: Richard C. Wilson (Narrator)
What they said
- Richard C. Wilson on sourcing staff. Wilson says the average number of employees focused on deal origination is 3.7 at venture capital firms and 6.9 at private equity funds. He notes that most family offices lack enough staff to devote to sourcing. (at 0:29)
- Richard C. Wilson on angel group fit. Wilson says angel groups screen deals according to the group's overall approach and biases, which may not match a family office's preferences. He recommends researching a group and getting a feel for it before joining. (at 2:24)
- Richard C. Wilson on online networks. Wilson says online networks make it easy to search many deals, but their screening can be inconsistent and the volume can make it harder to assess what companies claim. He adds that these networks can allow investors to make small investments alongside others. (at 2:51)
- Richard C. Wilson on adviser relationships. Wilson points to attorneys, accountants, and business consultants as possible deal sources. He says getting to know them individually can help a family office learn whom to trust and understand their long term interests. (at 5:36)
- Richard C. Wilson on family office websites. Wilson says a family office website can explain its industry focus and preferred company revenue range so entrepreneurs can decide whether to approach. It can also specify how companies should submit information. (at 8:57)
In their words
"you can network with representatives from larger companies that may one day acquire the companies in which you invest"
"You can also add a Blog discussing investing topics or tips for entrepreneurs or links to any groups you are affiliated with"
Why it matters if you are building or preserving great wealth
Securities attorneys often enter at the first step of a company's fundraising process, before deals become deals. That can put a family office in the conversation while a company is still shaping its funding plan.
From Richard's exclusive Billionaires.com interviews
Lessons from Richard C. Wilson's one-on-one interviews, as published on each interview page.
- Binod K. Chaudhary: Never chase a deal out of desperation. Stay cool and look at every part of the deal. Have your advisers and your finance team review it critically. Your counsel should review it too.
- Serg Bell: Success comes from many decisions. He does not see business as one winning bet. He sees it as a long game, like poker or bridge, built on many smart choices over time.
- Tim Draper: Make your customers your sales force. Hotmail put a message at the bottom of the screen inviting people to get free email. It spread to 11 million users.
See the data
Frequently asked questions
What can a business broker prepare before presenting a company?
Wilson says some brokers help improve operations or clean up financial statements. At a minimum, they may gather common documents into one packet to make a review easier and faster.
Why might a venture capital firm refer a company to a family office?
Some venture capital firms receive hundreds of business plans each month. Wilson says they investigate only a handful. He says a firm may refer an opportunity that is too early or unlikely to return $100 million or more to that firm.
Sources
Quotes are copied from the video captions and checked against the transcript. Timestamps link to the moment in the video. General information only, not legal, tax or investment advice.