June 2, 2022
As of Q3-21, $418bn were invested in venture capital deals globally, surpassing the full year record established in 2020 of $333bn. There appears to be no sign of a slow-down. Family offices are taking advantage of the opportunity: Family office participation in venture has been steadily increasing. As of Q3-21, FOs were in approx. 4.2% of global venture deals, an understated figure (vs. 3.9% in 2020), according to data provider Pitchbook.
Typical FO’s VC portfolio is composed of 10 funds and 17 direct investments. Family Offices’ VC allocations continue to grow for a number of reasons, including the relative frothiness in the public markets. Long-term correlation between VC and the public markets is low; there continues to be exciting technological developments in the private markets, and the exit environment has improved.
FOs with experience in venture tend to source deals on their own (24%) and depend on their extensive networks, including GPs of venture funds (19%), and company founders/operators (16%). FOs are generating the least amount of deal flow through digital platforms (1%), existing portfolio companies (1%), and the family’s core operating business (3%).
The average global FO VC portfolio is spread across North America (44%), Europe (21%), and the rest of the world (35%). But even FOs with significant experience and assets tend to have a large part of their VC portfolio invested in their local markets/regions. Typical asset allocation by stage can be broken down into: 48% Growth stage, 24% Series A, and 28% into Pre-Seed & Seed.
Source: Campden Wealth and SVB Family Office Investing in Venture Capital 2021-22 (survey of n = 139 FOs)
