How Startup Companies And Funds Can Raise Hundreds Of Millions Of Dollars
by Russ Alan Prince

In a secluded corner of the family office universe are single-family office consortiums. When these consortiums invest they can easily provide hundreds of millions of dollars to a hedge fund or a private equity fund or a privately held company or project.

It is also quite telling that when a single-family office consortium is backing an investment, other high-net-worth investors, including the super-rich (net worth = US$500 million or more) as well as many institutional investors, tend to closely consider that investment. The result is for that investment to subsequently raise significant additional monies.

A strong interest among some of these single-family office consortiums is getting in early. They tend to be very interested in being founding investors in start-up hedge funds, private equity funds, and high-potential companies. According to Angelo Robles, founder and CEO of the Family Office Association, “Single-family offices and especially consortiums will back start-ups, but they will also negotiate highly advantageous arrangements. While these arrangements will not be as lucrative for the new business venture or hedge fund or private equity fund, they are now up and running, demonstrating success, and are likely to more easily attract other investors. Also when a single-family office consortium makes an investment, it’s substantial often running into the hundreds of millions of dollars. For them, anything less is rarely worth the time and effort.”

Lately, it is not unusual for single-family office consortiums to be proactive is identifying investment talent they then approach about starting their own hedge or private equity fund. However, for investment professionals looking to raise money from single-family office consortiums to start a hedge fund or private equity fund, critical success factors include:

  • Having proven expertise including a strong track record in a particular investment strategy.
  • Having a well-developed business plan.
  • Being able to pass with flying colors an extensive and deep background check.
  • Being able to access single-family offices.

The last point proves to be the most difficult. Single-family offices tend to be abstruse often by design. Single-family office consortiums are harder to uncover and access. Getting commercial lists of supposed single-family offices and cold calling them, for example, proves to usually be highly ineffectual. The most effective way to access single-family offices is to connect with them on their platforms such as the exclusive conferences and symposiums they attend or to be introduced by a professional they are currently engaging.