Raising capital from family offices
Investor Club Update: Mandates and Closings During the Pandemic
Investor Club - 4 Minute Update on Mandates & Closings on Deals
Investors looking for sourced direct investments and capital raisers who want to know what kinds of deals investors are asking for.
What stood out
- Investors are still allocating capital. Richard says investors are committing to deals during the pandemic. He points to real estate investments and alternative investments in a hedge fund vehicle as examples that have been popular.
- Income and royalty deals lead demand. The ideas in demand include income investments, gross revenue royalties and structured alternatives. Richard also mentions a life settlement strategy available to source. These do not track real estate, the stock market or operating businesses.
- Sourced, not manufactured. Richard states that the club does not create or cook up investments and then sell them to members. It looks for ideas from the professionals who interact with the Family Office Club team.
- Trust and downside beat headline returns. The club favors high conviction, relatively low risk ideas with moderate returns. In distressed deals, the focus is on collateral and managing downside risk. Richard says a credible team and strategy matter more than the stated returns.
- Capital raisers should use another route. The investor portal is only for investors who want to allocate to directly sourced investments. Richard asks anyone raising capital or syndicating deals not to register there. Angel, venture and startup deals are not part of that platform.
The short version
The Private Equity.com virtual investor club reached 150 investors under contract, according to Richard C. Wilson, founder of the Family Office Club. The club launched at the end of January and draws on the roughly 2,000 registered investors who attend Family Office Club panels, webinars and live events. Richard says investments are still getting done during the pandemic, including real estate and alternative investments in a hedge fund vehicle.
Demand is strongest for income investments, gross revenue royalties and structured alternatives that do not track real estate, the stock market or operating businesses. Richard says the club sources ideas from about 45,000 professionals a year and does not create the products itself. It does not take angel, venture or startup deals, so capital raisers should not register. He adds that investors are in research mode, running calls, data room reviews and due diligence.
Facts from this talk
- The Private Equity.com virtual investor club had 150 investors under contract at the time of the update.
- The club draws on about 2,000 registered investors from the Family Office Club and sources ideas from about 45,000 professionals a year.
- Richard's team has done 73 Zoom one-on-one video interviews since the pandemic started, which are shared in the investor portal at familyoffices.com.
Sources
From Richard C. Wilson's Centimillionaire Strategies YouTube channel: Investor Club - 4 Minute Update on Mandates & Closings on Deals. 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.
Said on the call
"High trust, high conviction. The strategy and a credible team are much more important than what the returns are."
"Investors are in research mode. They're meeting with people via Zoom, they're doing phone calls, getting access to data rooms, conducting due diligence and getting together their thesis."
"We don't do angel investments or venture capital or startups within that platform, just because we're focused on things that are already profitable and have already grown to a certain level."
Related questions
- Do family offices invest in funds or only direct deals?Family offices do both.
- 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.
- How long does a family office take to make a decision?There is no standard timeline, and I would not trust anyone who gives you one number.
Questions about this video
Are investors still making commitments during the pandemic?
Yes, according to Richard. He says investments are getting done, including real estate and alternative investments in a hedge fund vehicle.
What kinds of investments is the Private Equity.com club focused on?
It focuses on income investments, gross revenue royalties and structured alternatives. It also looks at cash flowing real estate and a little real estate development when there is collateral and some downside protection.
Should someone raising capital register on the investor portal?
No. Richard says the portal is only for investors who want to allocate to directly sourced investments. It does not take angel, venture or startup deals.
Put this into practice with the family office fit check. See all raising capital from family offices resources.
