Raising capital from family offices
How Family Offices and Angels Source Off-Market Deals (Part 2)
How Family Offices and Angel Investors source exclusive, off-market deals | Investor Panel
Founders and capital raisers who want to understand where family offices, angel groups and accelerators find deals and how they think about terms.
In their words
"We help folks find those truly exceptional investments for institutional clients that have at least $50 million."
"One of the disadvantages of being an angel investor is you are almost always a deal taker, not a maker."
"If you've looked at 300 or 6,000, you can be a pretty good judge, even if 5 years ago you had never tasted one, right?."
Summary
Referrals and trusted networks are the main deal sources named by an investor panel at a Family Office Club event. Blue Startups says it receives about 600 applications per session and accepts about 10 companies. Another panelist relies on people they trust. Russell of Raymond James looks to ecosystems of proven founder builders and to family offices that bring partly funded deals.
The panel also covered terms. Tom splits a family trust into 90% conservative holdings, 5% cash flowing expansion companies and 5% startups. He sometimes negotiates for a stronger say in how a company is run. Cliff says angels are usually deal takers, though an angel group recently led a round and won board seats. Blue Startups says it uses special terms because it offers a 12-week program and network access along with cash.
Facts and figures
- Blue Startups gets about 600 applications per session and accepts about 10 companies.
- One family trust keeps 90% in conservative investments, 5% in cash flowing expansion companies and 5% in startups.
- Hawaii Angels has invested in 130 companies, all early stage, and began in 2001.
Sources
From Richard C. Wilson's Centimillionaire Strategies YouTube channel: How Family Offices and Angel Investors source exclusive, off-market deals | Investor Panel. Quotes come from the video captions, lightly edited for readability. Figures are the speakers' own estimates and experience.
General education only. Not legal, tax or investment advice.
Talk to a securities attorney to explore options around investment terms and structure, board rights and offering documents. Do not use AI to write your own legal agreements.
Five points worth keeping
- Referrals drive the best deals. Blue Startups has run for 12 years and built a network of hundreds of founder alumni, 250 mentors and 400 investors. Its best deals come from referrals by those people.
- Volume builds deal judgment. One panelist compares judging deals to tasting pineapples. After looking at 300 or 6,000 deals, an investor is often a better judge. After seeing only a few, it is harder to tell what is good.
- Trust comes before the deal. One investor sources deals by getting to know people. They will not invest where they do not trust the individuals running the company to carry it through to the finish.
- Terms can reflect strategic value. Russell says Raymond James will consider adjusting terms when a partner furthers the relationship or adds underwriting capacity. It is more about the relationship than the price. Another panelist notes that taking 20% of a round from a sector veteran can help bring in the rest of the money.
- Staging can help manage early checks. Tom describes staying closely involved with management and splitting placements across a first and second round to manage risk on early checks. Many investors talk to a securities attorney about how to structure this.
Related questions
- How do I find the decision maker at a family office?Start by meeting the family through advisors, events and the people who manage their investments.
- Do family offices co-invest alongside other investors?Yes, many family offices invest alongside other investors, and they often feel more comfortable when another respected investor is already in the deal.
- What is the difference between single and multi-family offices?A single family office works for one family and is built the way that family wants.
Questions about this video
Where do these investors say their best deals come from?
Mostly from referrals and trusted networks. Blue Startups relies on alumni, mentors and investors for referrals. Another panelist sources deals by getting to know people they trust.
Why do angel groups help with deal terms?
Cliff says individual angels are almost always deal takers. By pooling money, his angel group led a round for a Utah irrigation company and ended up with board seats and favorable terms.
What does Raymond James look for?
Russell says the group works with institutional clients who have at least $50 million, though this is his description of his own group. It likes late stage growth companies with a visible exit through a strategic sale or an IPO. It will also consider asymmetric assets that diversify a portfolio.
Put this into practice with the family office fit check. See all raising capital from family offices resources.
