12:20 p.m. on May 23 was, as it happened, the time to get down to business. At least, it would seem so based on the theme of the midday presentation at the London Blockchain Conference 2024. Denny Chared, founder and CEO of DC Finance, gave a talk on what he’s seeing in the world of family office investing and shared why startups should be giving appropriate attention to family offices as a source of capital.
Family office investing is a world unto itself. At their core, family offices are private wealth managers who dictate (advise is perhaps a more neutral term) where the amassed wealth of ultra-high-net-worth families is parked and invested. The goals of these entities are less ubiquitous than you’d find in other kinds of investment funds, and their priorities are more tied to the priorities and interests of the family whose wealth is being invested than to the amorphous, aggregate whims of shareholders.
Chared’s DC Finance is a network of high-net-worth individuals and family offices, so he spends much of his time talking to family offices and attending events that may offer opportunities for family offices looking for the next big chance at ROI.
This apparently presented a sought-after vantage point for the London Blockchain Conference audience. Perched on the open spotlight stage in the middle of the exhibition hall, Chared was surrounded by a closely packed and intensely listening crowd.
Interviewed on stage by Paul Rajchgod, managing director at Ayre Ventures, Chared described a fundamental difference between family office investing and the kind done by VCs.
“A family office as an investor has no theme,” he said, describing how he attends many industry conferences looking for investment opportunities and often isn’t paying a huge amount of attention to the ostensible purpose of the conference. This, he says, is hard for many to wrap their head around.
“A lot of people have no idea how to reach these guys or the mentality that they’re dealing with,” adds Chared.
From the point of view of an ultra-wealthy family, the scale of their wealth is such that it doesn’t make sense to go to an investment bank or lower-level asset manager, who is partly looking after the interests of their own bank and is likely under instructions to push one product or another. For the obscenely wealthy, it’s safer and more economical to hire your own in-house team.
Rajchgod makes another point, which is that while you would expect, say, a software developer who just took their company public and is sitting on hundreds of millions in newly acquired wealth to focus their family office’s efforts on investing in what they know (software), that’s not what typically happens in reality.
“That’s not true: their family office’s job is to protect that wealth and invest it.”
“When you do an exit like that, the biggest fear – and rightly so – of folks is the fact that just because you know how to build a company, doesn’t mean you know how to invest. That’s a different thing – it’s very true, and many of them don’t know what they’re doing,” Chared agreed.
As for practical advice, Rajchgod asked Chared what advice he has for how startups should seek out and approach family offices.
“The mistake companies make is arrogance. This is something people don’t understand: families can invest in anything they want. Even if the ROI is great, they will take a pass if you piss them off or do something against their values, and rightly so.”
Chared told the story of a family office investor event he attended. One of the more promising offerings in attendance was fronted by a group of marketers who were exceedingly arrogant in their approach to the family office investors watching. As a result, swathes of those investors didn’t even open the pitch deck despite the ROI on offer.
Chared also emphasizes that though family offices represent an enormous share of global wealth, it is the hardest for start-ups to reach.
“If you want institutional investors and VCs, you just google them. How do you find out the wealthiest families in London?”
But if you can get access to this wealth, its uniqueness has advantages. Governed by the personal whims and preferences of the family as they are, family offices are often the first money in the door in spaces that eventually became unavoidable. Chared gave examples of cannabis and blockchain.
It also means that companies who are looking for this family office investment might be able to capitalize off their more personal offerings. Wrapping up, Chared gave the example of a firm that secured family office funding purely on the basis that one in 10 employees was handicapped or that the female head of a family’s wealth liked the fact that the capable pitcher in front of them was a woman.
Watch: Day Two Highlights at the London Blockchain Conference 2024
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