Raising Investment During a Period of Pandemic World – Coronavirus - within Family Offices/UHNW

We started 2020 on a high note and had never been so busy raising Investment for global companies where we had to create a Start Up Team and our New Executive Management Team. Then as this CV has taken it’s toll on the World with Italy on total ‘lockdown’ with 4000 deaths reported worldwide https://edition.cnn.com/world/live-news/coronavirus-outbreak-03-10-20-intl-hnk/index.html We are now in a ‘BLACK SWAN’ state!

FAMILY OFFICES

How do they cope? They have their own infrastructure and have become sophisticated at now being selective on what they invest in. Though there is a great interest in Technology I have seen a huge shift into Impact Investment. 41% of Global Family Offices now invest directly as the New Generation are more Entrepreneurial and this Generation like the ‘hands on’ approach.  Investing directly reduces their costs and fees.

UHNW – ULTRA HIGH NET WORTH

These people started out as Entrepreneurs and have built successful businesses so they can identify with Entrepreneurs as they where once in their shoes. They not only Invest but make the add value of expertise and connections.

FAMILY OFFICE LIFE CYCLE

Family Offices like to invest for a longer time frame not the traditional 5-10 years but for 25 years plus. With this Virus the financial market has become more volatile and so it is better to invest in numbers with other Wealthy Families, so they like to collaborate to coinvest which preserve their capital manages their risk and minimizes their fees and expenses.

While family offices have historically relied on asset managers to perform due diligence on potential investments and entered deals as limited partners, over the past few years, there has been a shift in this approach. Increasingly, larger family offices are becoming more sophisticated, building in-house investment infrastructures and pursuing direct investment strategies.

Greater control and decision-making ability

. These types of investments are more attractive than funds as they not only provide greater transparency and decision-making authority but also increased control over other investment drivers. These factors not only appeal to entrepreneurial families but also the next generation who desire to be more ‘hands-on’ when it comes to overseeing their family’s businesses and finances.

What’s more, the built-out internal investment infrastructure that direct investing necessitates is essential for the continued growth of the family office as the next generation who may lack investment knowledge prepares to take over the vast wealth and investment responsibilities of the family office.

Better value and interest alignment and return

By engaging in direct investing, family offices can use their permanent-capital status to better align their mindsets, values and interests with their investment strategies to maximize genuine cash-on-cash value rather than short-term rates of return.

Reduced fees and expenses

Another driver behind the family office’s direct investment trend is the reduction of fees and costs this presents. For decades, family offices have paid the industry-standard 2% management and 20% performance fees, or more when investing in top quartile funds.

The strength of Family Office networks

Affluent families are generally well connected, as are the businesses they run. Recently, however, family offices have begun to strengthen and broaden these connections, much like their private equity peers, to not only keep up with market trends and best practices but also foster opportunities and proprietary deal flow. We have found that with our FAMILY OFFICE EVENTS in London next one 26 March 2020 https://www.eventbrite.co.uk/e/family-officeuhnwiinvestor-spring-ev-technology-investor-event-tickets-89393316817 We have increased these from 1-4 per year and have seen our numbers grow there from 30 in 2017 to now 200 and this year before this CV was going to host in the Summer our Family Office Summer Conference with 300 https://www.eventbrite.co.uk/e/family-office-investor-summit-2020-tickets-90963284633 Though for our Spring one we have seen numbers down by 30%.

These Events we host enable family offices to take their collaborations a step further, pooling their capital and expertise, and entering cooperative investments or “club deals”. This form of collaborative investing not only enables greater diversification but also reduces risk and leverages the expertise of close family networks in industries where these families already hold a significant strategic advantage.

Making an impact

As the next generation enters the family office and prepares to take the reins, many are asking how they can put the family’s wealth to work for good. While philanthropy was often their predecessors’ answer, and in many instances still has its place, for this generation, market-based tools like sustainable and impact investing are often far more appealing. Instead of making money and then giving it away, these forms of investing offer the opportunity to make money and do good simultaneously, a model which the younger generation considers far more sustainable.

THE ELEPHANT IN THE ROOM

With this Virus which is dominating the media and the melt down of the markets from oil which is battering the financial markets. Many PREDICT this will go on until the end of 2020?

BUSINESS MODEL AND GO TO MARKET

In my view in this market I see  business models which are dependent upon activities such as travel, or events/gatherings, it would be wise to anticipate questions from investors around these topics as flagging up a risk whilst we go through the stages of the CV.

 By contrast, API-driven, or self-serve, or upfront multiyear recurring revenue models will be more valuable, where product-led growth could be a premium. Some may want to consider having a slide dedicated to this in pitch.

INVESTING IN ABOUT INVESTING IN THE FOUNDER AND THE TEAM – ABOUT PEOPLE

We have now for many years been Pitching to Investors via Skype Zoom and WhatsApp and other methods. Though it is now evident from my clients that out of 6 Investors they initially speak to only 2 now wish to meet up. Look at the share value of Zoom over the last few weeks so that opens other areas of where Investors will look to invest their money. Online Education and opportunities in social networking online. So, company culture and location will play a vital role at present during this worrying time.

INVESTORS WILL STILL INVEST – maybe we will revert back to how it was before this RUSH to secure investment – as an Entrepreneur I Bootstrapped my business and scaled it and concentrated on Sales and proof of concept before I considered raising Investment as I never saw this as an easy option giving away shares in my business or ‘giving it away’ no such thing as a ‘FREE LUNCH’

If you wish to follow up please contact me [email protected] WhatsApp 44 07939164110