Family Office Growth News — August 2023 Edition
Ryan Austin
CEO at Arondight Advisors | Strategic Advisor at Family Office World Media | Connecting Founders with Family Offices | Nasdaq.com Contributor
Welcome to the August 2023 edition of Family Office Growth News. This month, we bring you:
Ready to dive in? Let's kick things off with this month's Series A Wealth Watch.
Series A Wealth Watch
In this section, we highlight key developments in the Series A funding landscape and share the latest noteworthy investments this past month.
InnerSpace — revolutionizing space utilization with Wi-Fi-based RTLS
Zeelo — smart bus platform for employers and schools
The X-Factor: Zeelo is capitalizing on the lack of public transport options and the rising fuel costs in the U.S., targeting sectors like manufacturing and distribution. The company is well-positioned to offer a sustainable mobility solution that's gaining traction in both the U.S. and Europe.
ProjectDiscovery — democratizing cybersecurity with enterprise cloud platform
The X-Factor: ProjectDiscovery leverages its incredible open-source community to offer a unique approach to cybersecurity. With over 60k GitHub stars and 100k weekly downloads, the company's core scanning engine, Nuclei, conducts over 50 million scans each month across 100 countries. This community-driven innovation, coupled with enterprise-grade features, positions ProjectDiscovery.io as a transformative player in the cybersecurity landscape.
Cerby — managing access to “nonstandard” enterprise apps
Keona Health — streamlining patient access with AI-driven CRM
The X-Factor: Keona Health stands out for its specialization in optimizing patient communication across a diverse range of medical specialties and locations. With a focus on large-scale management services organizations and an array of medical specialties, Keona is strategically positioned for further expansion, making it a key player in the rapidly evolving healthcare landscape.
Are you a Seed or Series A founder with a compelling story to tell? DM Ryan Austin now for a chance to be featured in our next edition.
As we close the chapter on these promising Series A ventures, it's time to turn the page to an exclusive conversation with a man who has been a cornerstone in the Family Office landscape — our next segment features an in-depth interview with Ron Diamond.
An Exclusive Interview with Ron Diamond
This month, we were privileged to chat with Ron Diamond, the Founder and Chairman of Diamond Wealth. Investing alongside over 100 Family Offices ranging from $250 million to $30 billion, Ron's influence spans beyond investments to philanthropy, social impact, governance, and wealth transfer.
His multifaceted expertise is further highlighted by his leadership roles, including Advisory Board member for 10 private companies, Chairman for 4, and the Former Chairman of the Advisory Board for the 美国斯坦福大学 Disruptive Technology program.
His belief in the power of collaboration and networking is exemplified in his role in TIGER 21 , a premier peer-to-peer learning network. Let's explore how this network is shaping the way high-net-worth individuals connect and grow.
The power of networking: TIGER 21
TIGER 21 is the premier peer-to-peer learning network for high-net-worth individuals. It was founded by investor Michael Sonnenfeldt , who, after a major exit, sought to create an exclusive forum where he could discuss his shifting priorities such as family, legacy, and investment with peers.?
Ron, who chairs two Chicago branches as well as the newly created Family Office Group, likens the group to a “graduate program,” emphasizing the unique opportunity to network and share insights.
Family Offices: A new industry in the making
The Family Office industry is a complex and evolving landscape, controlling a staggering $10 trillion in capital across approximately 15,000 global Family Offices.
When asked for his take on the Family Offices, Ron describes the current state of the industry as, “very fragmented, very inefficient, and very siloed." When I asked Ron for his opinion on the state of Family Offices, Ron estimates over 85% of them are not structured properly.
The need for Multifamily Offices
Building on the challenges in the Family Office landscape, the Multifamily Office (MFO) model emerges as a solution. For ultra-high-net-worth individuals with less than $250 million, a MFO is a solid option.?
Ron articulates this perspective, stating, “In my opinion, most of the Family Offices that exist today should not exist. That's just my opinion. I think they'd be much better off going to a Multifamily Office and just doing whatever they did — as far as investing is concerned. Wherever they made their money, that's where they should invest.”
Early innings
The Family Office industry is in its early stages, and Ron predicts a transformation. He likens the current state to the third inning of a baseball game, with much more to come.
“I think we're in the third inning of the evolution of Family Offices. Over the next five to ten years, I think as private equity and venture capital disrupted the public markets in the early to mid 80s, Family Offices are going to start, not replace, to disrupt the private equity and venture capital industries.”
The concept of patient capital
Patient capital is a term Ron uses to describe the long-term, stable investment approach that Family Offices can afford to take. Unlike private equity and venture capital firms, Family Offices are not pressured to sell their investments within a specific timeframe.?
"The difference is that in order to create alpha, at least in my opinion, you need to operate and not financially engineer a business. If you look at the private equity firms today, most, not all of them, but many of them are finance people, not operators… If you have a company with family members, and you want them to have a position in 10 years, the private equity firm is always going to sell it. They’re going to bid the highest, but they're going to strip the company and flip it."
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Competing with major firms
While patient capital offers a long-term approach, Family Offices must also navigate the competitive landscape, particularly against major firms.
On this topic, Ron observes the trend of Family Offices engaging in direct deals to bypass private equity and venture capital firms. This strategy worked for a while but has become problematic with recent economic shifts, such as rising interest rates and the onset of a recession. Ron predicts a backlash as Family Offices adjust to these new economic realities.
He emphasizes that the competitive edge once gained through direct deals may now require a more strategic and adaptable approach, especially in the face of major firms with vast resources.
The “golden objective”
“The golden objective is not just to create alpha and wealth. It's also to create continuity,” Ron asserts.
To him, the purpose of having a Family Office is wealth preservation, continuity, and family governance.
Succession
As we delve into the intricacies of Family Offices, succession planning emerges as a critical aspect, yet the statistics are sobering. Only 25% of Family Offices make it to the second generation, 10% to the third, and 5% to the fourth.?
How should a founder build a single Family Office to last? Ron answered:
“The very first thing you should do when you have a liquidity event, before you talk to anybody about investing any dollars, is talk to an estate planning attorney and get everything structured properly.” Building a successful Family Office is not just about financial management; it's about creating a lasting legacy.?
Impact investing
“In the new, younger generation, impact investing is becoming a huge thing. It will probably go up to 50% in the next three to five years. That's driven by the millennials going up, not the older generation going down… creating alpha is obviously important. But it's not the most important thing,” Ron observes.
Dynamic trends in the Family Offices
Ron believes that Family Offices are innovating and growing more competent. He highlights the shift in how Family Offices are figuring out ways to compensate their employees to compete with the Carlyles and the Blackstones of the world.
“Today, if a Family Office spends $250,000 on a kid out of college, they look and think ‘that cost me $250,000.’” In contrast, “Blackstone hires you for $250,000 and they look at you as a potential $10 million profit center.”?
Ron’s mentor and philanthropy
Ron's views on mentorship are deeply personal and tied to his own experiences. He shares the story of his first mentor, Michael Milken.?
After being diagnosed with prostate cancer, Milken launched the Prostate Cancer Foundation in 1993. Ron recounts, "when he developed it, rather than just throwing money at the wall, he built it like a VC fund... because of him: you, me, and most of the male people who read your newsletter will not die of prostate cancer."?
Series A insights
Ron's insights into Series A investments are not just theoretical musings; they reflect a deep understanding of where real value can be created.
"I think Series A is really where you’ll create the most alpha, so I think that's a good spot to be in."
Ron's upcoming TEDx talk
Ron's candid opinions on Family Offices, their evolution, true purpose, and potential to shape the world are both insightful and optimistic — proof of his standing as an esteemed ambassador and thought leader in the Family Office space.?
Visit Eventbrite to buy tickets .
With a career rich in experience and a unique perspective on the industry's future, Ron's talk promises to be more than just a historical overview or forecast. It will be a reflection of his deep understanding of what makes Family Offices truly special, articulating the complexities, challenges, and opportunities that define this unique industry.
Whether you're an investor, entrepreneur, or simply curious, don't miss this opportunity to be enriched, engaged, and inspired.
Industry Events: September 2023
As the summer winds down, the Family Office community gears up for a busy fall season. This September, don't miss the opportunity to network, gain insights, and explore investment avenues at these exclusive Family Office events happening across the United States.
Closing
As we wrap up this edition, we've delved into the intricacies of Series A funding, featuring companies that are not just raising capital but also raising the bar in their respective fields. We've also had the privilege of hearing from Ron Diamond, whose perspectives on Family Offices and Series A investments are both enlightening and thought-provoking.
Your voice matters to us. For those who wish to contribute to the conversation, we invite you to leave a comment below, or DM Ryan Austin with your feedback.
Stay tuned for our next edition, where we'll bring you more exclusive interviews, in-depth analyses, and timely updates.
Until then, stay invested.
Thank you for reading,
Email: [email protected]
Disclaimer:?This publication is created and distributed by Ryan Austin Digital and may not be construed as investment advice. This newsletter does not provide an analysis of any company’s financial position and is not a solicitation to purchase or sell securities in any company. Ryan Austin Digital is an investment research and marketing firm, and not a registered broker dealer.
Connecting Family Offices, UHNWI, & Service Providers | CEO & Owner of Family Office List
1 年You hit this one out of the ballpark Ryan ???? Thank you for sharing such valuable insights and your killer interview with Ronald Diamond. Im beyond excited to collaborate and find exciting new ways to bring value to the sector and the Family Office List community. ??
A great read. Thanks for the mention!
Helping to Build out the Global Mental Health Ecosystem | Mental Health Advocate & Influencer | Founder @ THE REAL Mental Health Foundation | THE REAL Summits | Impact Investing Pioneer
1 年Ron you are everywhere!