FOA - Entrepreneurship in the Family Office.pdf - Summitas

Entrepreneurship in the Family Office
Phases are the most time consuming. In addition to these projects,
as the operation matures there will be more and more projects in
the Growth Phase that may need emergency help at various times.
As the portfolio becomes larger, additional team members can be
added as needed.
Another important topic in this model is financing. An SFO can
choose at what point, and to what degree, co-investors are included
in the projects. On one end of the spectrum, the SFO can put in
enough seed capital to prepare a company for a Series A round and
then raise that capital externally. On the other extreme, an SFO
can maintain 100% ownership and fund the company internally all
the way through to exit. In between these extremes are options to
invite some outside investment and maintain your pro-rata share
in subsequent rounds. The decisions can be based on the capital
requirements of a company, the company’s attractiveness relative
to other internal projects, and the valuation the company is getting
in the market for that round.
In addition to the operational aspects described above, an SFO with
a startup program has the opportunity to build a name in the startup
space, which has significant benefits. A strong brand makes it easy
to attract the best partners, management, co-investors, and team
members. High visibility also means easier press for your companies
when they launch, which translates into a lower cost of acquisition
for your startup companies. To be sure, no one has executed on this
part better than Richard Branson, and it has contributed greatly to
the success of his operation. The good news is that incubators are
still rare enough that a well-funded one can get the attention of the
entrepreneur and venture community fairly quickly.
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