FOA - Entrepreneurship in the Family Office.pdf - Summitas

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Some people do not enjoy entrepreneurship, while other personalities, like Richard Branson, have a passion for developing new companies in this manner. What seems to drive the interested group is the creation of products and services that have impact – the innovation. it’s not for everyone
Entrepreneurship in the Family Office Often times the additional wealth generation doesn’t seem to be the primary driver, though financial benefit is surely a contributor. The financial value is almost more a measure of how much impact the individual has had – did you create a billion dollar company? How many millions of people are you serving and how have you made their lives better? While typically addressing less critical issues than philanthropy, some of the impact and legacy mentality has clearly spilled over. Sir Richard calls the philosophy, “business as a force for good”. For many people though, different outlets for creativity and achievement will lead them to places other than entrepreneurship. Another detractor is that entrepreneurship in the SFO requires time and/or people to execute the initiative. If there is no one from the family who has the interest and skill to drive the process, a quality person must be brought in. In most cases this is the best route, allowing the family to participate at different levels. The $100k we noted above to start some companies is actually higher when an additional person’s salary is spread over a few startups per year. It is much easier and less expensive (in the short term anyway) to write checks to funds. However, if the project leader is good, they should more than pay for themselves, and that should be true of any investment manager brought into an SFO. If a family is not ready, or interested, to create this kind of initiative in-house, there is another option that yields at least some of the benefits of entrepreneurship. If you can find an SFO that already has an active company incubation program, you can co-invest with them. While you may be investing slightly later in the value creation process, you will still be able to participate in new company opportunities where someone else has created the infrastructure to mitigate risk. Working with SFO’s that focus on developing investment opportunities can also provide access to later stage or distressed deals as well (a topic for another paper). FamilyOfficeAssociation.com it’s not for everyone
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FOA - Entrepreneurship in the Family Office.pdf - Summitas

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