Family offices typically want to stray from the spotlight. They are known to be discrete, and rightfully so. Otherwise, they would have hundreds of asset managers and business executives knocking on their doors in search of capital, making it very cumbersome for family offices. Therefore, it is not surprising that family offices often stay under the radar, reaching out to asset managers when they are interested.
So what are some ways private equity, hedge fund, and venture capital fund managers can raise capital from both single family offices (SFOs) and multi-family offices (MFOs)?
How Asset Managers Can Attract Family Offices
1. Ask for Referrals
According to a Grant Thornton report in 2012, nearly 69% of single family offices cited referrals as being a crucial way of sourcing investment opportunities. It is common for family offices to work with advisors, consultants, senior executives, and various professionals that cater to the different needs of wealthy families. Therefore, it is in the best interests of asset managers and fund managers to understand the web of networks that the family office has, and ask for referrals when they are ready. And what does it mean to “be ready”? Every family office is different. Therefore, even before asking for referrals, asset managers should first research and understand the family offices’ goals and how their investment opportunity fits in with the overall picture. When asking for a referral from someone, asset managers should also understand that professional’s quality of relationship with the family office.
2. Become a Thought Leader of Your Industry
Some family offices conduct their own research when looking for investment opportunities. Although more family offices may invest through referrals than through research and direct sourcing of asset managers, thought leadership is a good way for asset managers to stand out from the sea of other fund managers. So what are some ways asset managers can be recognized as thought leaders in their respective industries?
- Speak at Conferences
It is common for executive directors of family offices to attend industry conferences throughout the year. Attending conferences serves as a way for family offices to keep in touch with each other and learn what is going on in the industry. Speaking at a conference on a panel or giving a keynote session provides the asset manager with the opportunity to show and share his/her expertise in the field, helping grow his/her thought leadership.
There is a plethora of conferences that family offices attend. Some conferences are hosted by professional associations while others are held by conference organizers.
- Get Quoted and Published in Industry Publications
Everyone consumes news at some point throughout the day. Another way for asset managers to display thought leadership is by getting quoted in the news, TV, radio, etc. Many times reporters will try to get the opinion of an expert to include in their publications. Getting quoted and receiving press are ways to bolster an asset manager’s thought leadership. In addition, when it comes to getting quoted in publications and news, it’s important to keep in mind to get press in the publications that will be read by industry experts and family offices. While getting quoted on the Wall Street Journal is great, asset managers should not rule out niche publications that may be referenced by family offices and other investors.
- Share Your Thoughts Using Online Mediums
Whether it’s setting up a blog on your firm’s website or submitting a guest post to a notable publication, online channels provide asset managers with another opportunity to share their expertise. While getting quoted on an article is great, these expert quotes are typically short and comprise only snippets of your interview. Submitting a guest article to a publication or writing a post on a blog allows more freedom for asset managers to share their thoughts and dig deep into a subject matter.
Overall, by being proactive and growing your thought leadership in the industry, you are able to paint a positive picture. People are naturally inclined to notice, recognize, and take interest in thought leaders. Family offices may be more inclined to reach out or take a meeting with a thought leader than with anyone else.
3. Cold Outreach
Nobody likes to get pitched to, and while cold emailing or cold calling will not be as effective as getting a referral, in some rare cases it works. Asset managers should remember to do their homework about the family office and their investment preferences and goals before reaching out. Obtaining information about a certain family office however may not come easy as many family offices prefer to be under the radar. In addition, when reaching out or talking to a family office, it’s essential that asset managers have a senior executive, not a junior, of the fund communicating with the family office.
4. Get Exposure to Family Offices Using Digital & Online Platforms
This is by far the newest way for asset managers to attract and raise capital from family offices. There is no doubt that technology is transforming the financial industry, and the process of raising capital will not be insulated from this transformation. Today’s family offices are typically run by older generations and baby boomers. This wealth will be passed down to their families from generation X, Y, and the millennials, those who happen to be more accustomed to new technologies. Asset managers should keep in mind that just as technology is being integrated and used in our everyday lives, tech will also change the capital raising process, allowing family offices and asset managers to better and more fluidly connect using digital mediums. One technology solution that recognizes this wave of change is DarcMatter. Therefore, asset managers should not rule out using online platforms alongside the more traditional methods, as was discussed earlier.
When connecting with family offices, asset managers should take the approach of slowly getting to know someone. And that means senior executives of these funds will have to take the time to sit down, chat, and explain the ins and outs of their fund to the family offices.
DarcMatter (“DM”) is a global fintech platform that streamlines the capital raising process for asset managers and provides investors with transparent and direct access to funds in the asset management industry.
DM’s mission is to enhance capital flow through fintech to create transparency and efficiency by providing direct access to funds in the Asset Management industry for Accredited Investors, Advisors, and Asset Managers.