If you’re a Limited Partner looking to actively invest or learn about Emerging Managers, I would love to connect! I am working on putting together a group specifically for LPs investing in Emerging Managers to exchange notes, insights, and opportunities!

Volume #6 TL;DR:

• Do not underestimate how much the sacrifice of starting your fund to pursue your passion and dream of success can resonate with a family office.

• When pitching a family office, you are most likely pitching a person, who is pitching a person.

• Give whomever you are pitching the right language and insights about you and your strategy to deliver a compelling pitch about you to whomever they in return are pitching.

• Be transparent and direct. Ask the right questions at the appropriate time - I can’t think of any LP who does not appreciate the honest attempt to contextualize the diligence process so both parties can be on the same page.

Who Are You Pitching?

Understanding the family’s journey:

You have probably heard this before, but if you have met one Limited Partner, you have met one Limited Partner. I cannot give out a recipe on how to successfully pitch a family office, simply because they are all different. Their origin story, their values, their structures, the engagement level of the family members, and the final decision-making process, can widely vary between family offices.

But many have one thing in common, a unique story of sacrifice, perseverance, and success. Behind the emergence of many family offices stand people who took a risk, sacrificed something most wouldn’t and succeeded. I always try to tell Emerging Managers, especially those in their first fund, that if they are pitching a family office in which the first and second generations are still involved in the decision-making, to not underestimate how much the sacrifice of leaving comfort behind to pursue their true passion and dream and starting their firm can resonate with the story of the family.

My advice to Emerging Managers is to learn about the journey of the family before their “family office level” and find elements that resonate with your own story and reason behind starting your fund. It might not make all the difference for a final “Yes”, but I would not underestimate how much of a connection it can create - it gets your foot in the door.

Understanding the process:

When pitching a family office, you are most likely pitching a person, who is pitching a person.

This might not be an incredibly revelatory insight, but from my experience, it is an incredibly important aspect to consider when going through the underwriting process with a family office.

When working with a family office I learned pretty quickly that before I was pitching the track record of the Emerging Manager, it was my track record that was assessed first. Look, any founder knows this who is pitching the Associate/Analyst and then Principal or Partner - and any Emerging Manager is aware of this process too. It’s just how the game works.

But the conclusion should be that it is critically important to give whomever you are pitching the right language and insights about you and your strategy to deliver a compelling pitch about you to whomever they in return are pitching. The language here is everything. With the best Emerging Managers, I experienced their conversations with me to be succinct, their story strategic, and their language memorable and cohesive that I had a distinctly easier time retelling their story compellingly in comparison to other Emerging Managers.

Understanding Your Piece to the Puzzle:

Family offices pursue different investment strategies simultaneously. They most likely will feel “at home” and most comfortable in a specific strategy and will be in a learning process in others. Venture Capital is, more often than not, one strategy the family office is currently learning more about and interested in increasing their allocation to. Learning itself means different things to different people - ideally, the family office perceives investing as a craft, which means that even with high proficiency, lots of learnings remain to be experienced.

So, as the Emerging Manager it is important to understand how much the family office is planning on allocating to your asset class over the next given timeframe. This in addition to their typical check size will give an idea of what weight their decision to invest in a fund has. From there you can assess how long the diligence process could take, you can prioritize your efforts accordingly, and set expectations. It can also help you understand how you can set yourself up for success in the process. Should you cover more basics than typical? What current concerns about Venture should you address? If the family office is just beginning to invest in VC, how should you think about positioning your differentiation as a fund?

A best practice here? Be transparent and direct. Ask the right questions at the appropriate time - I can’t think of any LP who does not appreciate the honest attempt of contextualizing the diligence process so both parties can be on the same page.

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