A family office is often a private company that manages wealth for high net worth families. These families often seek different avenues (such as private equity or venture capital) to invest and grow their familial wealth. The family office is focused on finding the right opportunity, a striking idea that they can empower and take forward. Unlocking this source of capital could be the key to getting funds for your start-up. To explore this new avenue of funds, you should research the family office’s investment philosophy and their investment criteria.
If a family office chooses to invest in your business, you may find that they provide more than just money. A venture fund generally has a fixed lifespan and is compelled to give returns to the external LPs towards the end of it. Unlike a venture fund, the family office does not have a clock ticking to put funds to work. Nor does it have the pressure of making quick exits nor external investors to whom it must report. Since long-term value creation is the primary concern, investment decisions are based on investment fundamentals. The family office has more patient and flexible capital that can support the needs of the business and can afford to gestate the investment for a longer duration to help the business grow. When it comes to small-to-medium-sized businesses, a family office could be an ideal source of funds.
How can founders benefit from a family office fund?
Providing incredible connections: In the start-up space, one of the key requirements for entrepreneurs is networking. Owing to their inter-generational connects and expansive networks, family offices have connections across sectors and can expose the founders to a bigger circle of entrepreneurs, investors, mentors etc. The global networks of ultra-wealthy families can be used to create opportunities for the startups — from providing strategic advice, subject matter expertise, identifying contract manufacturers, legal matters, sales or even hiring. Family offices appreciate the amount of work that the founders must put in to establish and run their business. They usually commit to aligning with the entrepreneur on a much deeper level. They ensure they are mentoring the young entrepreneurs on every step of the way and pushing them to achieve their business goals.
Artha India Ventures: Artha India Ventures is the early-stage investment arm of the Artha Group of Companies. It is a part of the family office of Mr Ashok Kumar Damani and Mr Ramesh M. Damani (both ex-Directors of the Bombay Stock Exchange). Artha India Ventures is an early-stage sector agnostic fund that has been investing in start-ups since early 2012.
Currently, it has a portfolio of more than 57 companies across India and the US and plans to grow the portfolio to 100 startups over the next 3–5 years.
Apart from investing, AIV also provides mentorship and monitors the start-ups closely through their initial journey to help them build sustainable and operationally sound businesses.
A Family Office with a unique investment model: Artha India Ventures has a unique self-sustaining investment model. They invest in high-yielding renewable energy assets and use the realizations from those assets to invest in high-performing start-ups. They plough the returns made from exits into renewable energy assets, thereby creating a self-sustaining cycle.