Capital Founders' OS Capital Founders' OS
Sign up
Investment Office · · 18 min read

The Founder's Guide to Building a Private Investment Office

Build a private investment office to manage wealth after selling your business. Complete guide: structure, governance, investment strategies, operations, and common mistakes. For founders with $30M+ who want control.

You sold your business. Now what?

You face a new challenge: managing significant wealth. This isn't about picking stocks or hiring random advisors.

It's about building a system. A system that protects and grows your capital for decades.

That's where private investment offices come in. Think of them as your personal investment company. You run your money with the same focus you used to build your business.

This guide shows you how. Modern founders set up lean offices with under $300M and keep full control.

We cover structure. Strategy. Operations. Common mistakes.

This is your playbook. From entrepreneur mode to investor mode. Without giving up control.

💡
What you'll learn

What a private investment office is and why it beats traditional wealth management

How to structure your office with the right legal entities and governance

Step-by-step setup process from goals to launch

Investment strategies: public markets, private equity, venture capital, real estate, alternatives

Operational infrastructure: technology, accounting, security, document management

Legal, tax, and regulatory considerations that protect your wealth

Real examples from BLN Capital, Labora Family Office, and Addition Capital

Critical mistakes that wreck family offices and how to avoid them

What Is a Private Investment Office?

Private investment offices are smaller versions of traditional family offices. They manage wealth for high-net-worth individuals or families. The focus is on investments.

The family office concept dates back to the 19th century. Families like Morgan and Rockefeller created teams to manage their fortunes.

Today, you don't need billions. Modern technology makes it possible to start a family office with $30-50M in assets or even less.

There's a gap in the market. A "service desert" for successful founders.

Traditional wealth managers offer cookie-cutter solutions. Big private banks focus on larger clients. They often just sell products. DIY investing doesn't provide structure or expertise.

A private investment office fills this gap. Personalised management. Full control. Complete flexibility.

Single versus multi-family offices

There's a significant difference.

Single-Family Office (SFO): Serves one family or individual.

Multi-Family Office (MFO): Serves multiple unrelated clients.

A private investment office is typically single-family. It's your dedicated structure.

Sometimes people call it "digital" or "virtual." This means it's sized right for your wealth. It uses technology and outsourcing. Not a large in-house staff.

Why do founders create these

Why not just use a private bank?

Control. You set the strategy. It aligns with your goals and values.

Holistic planning. Everything connects. Investments, taxes, estate planning, philanthropy.

Deal access. You can get into private deals. Traditional managers can't offer this.

Privacy. Your financial matters stay in-house.

Flexibility. No bureaucratic rules. No cookie-cutter approach.

Most importantly? You stay involved. Many entrepreneurs enjoy investing. They want to apply their business skills to grow wealth.

Managing wealth is different from creating it. The private investment office professionalises that process.

Structure and governance

Set up your office like a business. Clear structure. Good governance. Working systems.

You need the proper legal structure. Common options:

LLC (most popular in the US)

Family Investment Company (common in the UK)

S-corporations or C-corporations (less common)

Many offices use multiple entities. One entity (OpsCo) employs staff and handles operations. Separate entities hold investments. This protects you from liability and helps with taxes.

Jurisdiction matters. Some families use tax-friendly locations. Delaware. Wyoming. Singapore. Dubai's DIFC.

In recent years, the UAE has been attracting family offices with its favourable tax rates, updated regulations, and streamlined setup process.

Read our Family Office Location Guide for more on different jurisdictions.

Bottom line: Get qualified advisors. Legal and tax experts. Find the optimal structure. Balance tax efficiency, compliance, asset protection, and simplicity.

Governance basics

Good governance is essential. Start by defining your mission.

What are your objectives? Capital growth? Income? Preservation? Impact investing?

What's your risk tolerance?

How will you make decisions?

Transparent processes prevent emotional decisions, even in a one-person office.

Create an investment policy statement. Document your philosophy and guidelines.

Define roles if others are involved. Spouse. Children. Friends. Who has authority for which decisions? What needs consultation?

Some founders create an investment committee. Or an advisory board. Trusted experts review the strategy periodically.

Your structure should include a mission. Advisory boards or meetings. Documented processes for decisions and information sharing.

Team versus outsourcing

Digital family offices keep staff lean. Many start with no full-time staff. Just the principal.

They rely on external advisors. Lawyers. CPAs. Investment consultants. A part-time bookkeeper or assistant.

As complexity grows, you might hire key people:

Full-time staff is expensive. A few employees can cost $1.5M to $2M annually.

That's why outsourcing is common. Non-core functions get outsourced. Tax. Accounting. Legal work. Investment management for certain assets.

A virtual family office means this: a team of experts on call. Coordinated by one central person. That might be you or an external advisor.

Risk management

Apply corporate governance principles and implement controls for your money:

Family offices are major targets for cybercrime and fraud. Don't skimp on security.

A 2024 Deloitte survey found that cybersecurity is a top concern. Over 43% of family offices experienced a cyberattack in the past two years. Half suffered multiple breaches. Only a small percentage feel "very well protected."

Assess different risks regularly. Investment risk. Operational risk. Regulatory risk. Have contingency plans.

What happens if you're incapacitated? Who manages assets? Some families draft a "family continuity plan" early.

Setting up your office

Here's the process step-by-step.

Step 1: Clarify goals

Start with "why." What should your family office achieve?

Preserve wealth for future generations? Actively grow capital through direct investments? Major philanthropy component? Is property management important?

For many ex-founders, the goal is balanced. Preserve and grow wealth. Stay involved through direct investments.

Consider your family. If you have children, include educating the next generation.

Step 2: Choose structure and jurisdiction

Get legal counsel. Form the correct entity or entities.

Consider:

Understand the structure. Feel comfortable with its complexity.

Know regulatory definitions. In the US, single-family offices can be exempt from registering as investment advisors. As long as you only manage family funds.

Step 3: Establish governance

Before making investments, develop your Investment Policy Statement.

Document:

Outline operational policies. How often do you review portfolio performance? Who can move funds?

These foundations seem tedious. But they prevent chaos later.

Step 4: Build your team

Decide what's in-house versus outsourced.

Early on, rely mainly on external advisors:

If activity grows, you may hire dedicated staff.

Always check references. Ensure trustworthiness. Beyond technical skill, integrity is paramount. These people handle your personal finances.

Step 5: Set up infrastructure

With structure and people in place, open accounts. Bank accounts. Brokerage accounts.

Transfer assets into new entities. Establish needed credit lines.

Many family offices use multiple banks. Different countries. This diversifies portfolios. Provides access to local deals.

Make sure signing authorities work. Online access is configured correctly.

Step 6: Implement technology

Early on, spreadsheets are tempting. This gets inefficient fast.

Consider family office software. Addepar. Masttro. Asora.

These platforms:

Replace clunky Excel with a modern dashboard. See your entire net worth.

When choosing software, check features. Multi-asset class support. Security. Collaboration capabilities.

Step 7: Develop investment strategy

Now decide how to invest capital. Create target asset allocation. Match your objectives and risk appetite.

Example (not financial advice):

Every family is different. Some invest heavily in what they know. Tech startups. Others diversify away from their industry.

Can't hire a full-time CIO? Get someone fractional. They'll help create your allocation and monitor your portfolio.

Plan for liquidity. Don't lock too much into illiquid investments. You might miss opportunities or face cash crunches.

Keep reserve funds for unexpected needs.

Step 8: Launch and refine

Once the initial capital deployment is complete, you can shift your focus to monitoring, managing, and making necessary adjustments.

Here is what you should plan for:

- Conduct monthly cash flow reviews

- Perform quarterly assessments of performance and strategies

- Carry out comprehensive evaluations on an annual basis

Stay flexible and ready to adapt as circumstances evolve. It’s also crucial to keep an eye on costs and monitor office expenses concerning the benefits and returns you’re seeing.

Investment strategies

Private investment offices can pursue a broader range of asset classes than typical investors. More strategies, too.

Public markets

Nearly every family office has public securities. Liquidity and diversification.

Typically includes:

Equities: Individual stocks, ETFs, mutual funds for growth

Fixed income: Bonds or bond funds for stability and income

Mix depends on risk tolerance and goals.

Digital offices often hire external managers or fractional CIOs. Others use passive approaches. Low-cost index funds.

Entrepreneurs often have higher risk tolerance. Family offices may be more equity-heavy than traditional advisors recommend.

If growth is a priority, target 60-70% equities. Accept higher volatility for better long-term returns.

Public portfolio serves as the liquid core. Draw on it for cash needs. Rebalance to seize opportunities.

Private equity

Taking ownership stakes in private companies.

You might:

Benefit: higher returns than public markets. Illiquidity premium and active management.

Downside: capital locked up for years. Commit only what you won't need soon.

Do proper due diligence on the funds you invest in. Top-quartile funds significantly outperform average ones.

Be selective. Be very careful where you deploy money. A few poor deals drag down overall performance.

Venture capital and startups

This has become extremely popular among tech entrepreneurs-turned-investors.

Family offices are major players in venture financing. 35.5% of all global capital invested in startups in 2022 came from family offices.

Three ways to access ventures:

Each has pros and cons. VC funds provide diversification. But charge fees. Long lockups.

Direct investing gives more control. Potentially better terms. But requires time and expertise.

Many first-generation offices dive into direct startup investing. It's exciting. Leverages entrepreneurial experience.

BLN Capital (the family office of Kolibri Games founders) invests in early-stage startups. Especially mobile gaming. Their domain expertise.

One lesson they shared: at first, "every VC ticket sounds great." You're surrounded by pitches. Must become more strategic.

Develop criteria to filter deals. Look at the deal flow as a portfolio. Not just one shiny startup at a time.

Venture investing requires follow-on cash reserves and capital calls, along with oversight of many small positions. Set an annual budget for startup investments and focus on sectors you understand deeply.

Real estate

Property has always been a reliable investment. It provides a source of income, acts as a hedge against inflation, and has the potential for appreciation.

Invest:

Passively: Through REITs or real estate funds

Actively: Buy properties directly

Direct ownership gives control. But requires property management. Often, offices hire speciality managers or partner with operators.

Watch concentration and liquidity. Real estate deals are chunky and illiquid. Ensure diversification by type and location. Avoid over-leverage.

Other alternatives

Hedge funds: Long/short equity, global macro, alternative credit. They play a crucial role in your portfolio and provide uncorrelated returns. But many investors were disappointed by high fees and mixed performance over the last few years.

Impact investments: Capital to ventures delivering social or environmental benefits alongside returns. Renewable energy. Education. Social enterprises. Younger wealth creators increasingly prioritise this.

Crypto and blockchain: 72% of family offices are investing in crypto or considering it. Interest is higher among smaller family offices.

Exposure through:

Be careful. Unique risks. Custody risk. Hacking. Regulatory uncertainty.

Best practices: use reputable custodians. Diversify across assets. Allocate a small portion of the portfolio (typically 1-5%).

Portfolio construction

An effective portfolio blends these elements. Base of traditional assets. Selection of alternatives for alpha and diversification.

On average, family offices allocate about 40% to alternatives. Alternatives have been a significant source of returns in a low-yield world.

Manage:

Liquidity: Stagger commitments to illiquid funds

Vintage diversification: Invest across different years and market cycles

Your strengths: Allocate more to areas where you have expertise

Consider co-investment opportunities. With other families or funds. Put more money into attractive deals. Without paying fund fees.

Maintain rebalancing discipline. If one part soars or crashes, periodically rebalance. To target weights. Unless you have a tactical reason not to.

Operational infrastructure

Modern offices need an operational backbone. Tracking. Reporting. Collaboration.

Financial reporting

Without proper aggregation, you won't know exposure or performance across accounts.

Use specialised software or a consolidated reporting service.

Tools like Asora, Addepar, Black Diamond, FundCount:

If you don't want to manage software, you can outsource it.

Accounting

Your office needs general ledger accounting. Tracks income, expenses, and balance sheets.

One entity and a few transactions? QuickBooks or Xero with a bookkeeper might work.

As complexity grows, you will need more robust systems.

Essential tasks:

Many offices close books monthly or quarterly. Wise to have an independent accountant review periodically.

Document management

Family offices accumulate documents. Legal contracts. Investment agreements. Tax forms. Statements.

Implement secure document management early.

Well-structured encrypted cloud folder. Or purpose-built vault. Quick retrieval by category. Share secure access with advisors as needed.

Tools like Slack or Microsoft Teams work for daily collaboration. With appropriate security settings.

Cash management

Ensure robust setup:

Many offices maintain a cash buffer. Rainy-day fund. Cover 1-2 years of expenses or commitments per entity.

If cash flows are complex, maintain a forecast. Nothing worse than fire-selling an investment because you forgot a capital call.

Security

Strong IT security is a must.

Consider:

Educate family members or staff on phishing risks. Wealthy individuals are high-value targets.

Simple measures, such as verifying transfer requests through a second method, can help to prevent fraud.

Check out Simple for tech stack resources. List technology service providers for family offices.

Take care of legal and tax at the start. Specifics vary by jurisdiction. Here are the key points.

Tax planning

A liquidity event (such as a company sale) often triggers significant tax planning needs.

Your structure should optimise taxes legally:

Entity selection: The UK Family Investment Company can reduce inheritance tax. Allow investment growth taxed at corporate rates (lower than personal).

Location strategies: Some families use tax-neutral jurisdictions. Especially if globally mobile. UAE offers 0% tax on many income types. Magnet for family offices.

Ongoing tax management: Tax-loss harvesting. Charitable deductions. Efficient handling of private investments. US Qualified Small Business Stock (QSBS) exclusions are valuable for startup investments.

Create a tax calendar. Track filing requirements across jurisdictions. Missing a compliance filing is costly.

Regulatory compliance

Single-family offices are typically less regulated as long as you truly only manage your own family's money (and maybe some friends').

The US Dodd-Frank Act provides an exemption for single-family offices. From registering as investment advisors. Under specific criteria.

Dubai's DIFC: single-family offices don't require a license to act as financial advisors.

Nevertheless, one must follow laws and regulations:

If you pool money with others beyond immediate family, you may inadvertently become an investment company. Subject to securities laws. Most avoid this. Only deal with family assets.

Estate and succession

Part of legal planning: smooth wealth transfer to the next generation. If relevant.

Even if young, put basic estate documents in place:

Many offices create a holding trust or foundation. Owns the investment company. Provides continuity beyond the founder's life. Potential estate tax benefits.

Incorporate estate planning early. Much easier to move assets into trusts when first setting up than later, when they've grown in value.

Philanthropy

If giving back is part of your goals, consider a family foundation or donor-advised fund (DAF).

Offices often oversee charitable entities alongside investments.

A private foundation can involve family members. Establish a legacy of philanthropy. Has tax advantages. But distribution requirements (US: about 5% of assets annually). Administrative overhead.

A donor-advised fund is simpler. Account at the sponsoring charity. Park funds for future giving. Receive an immediate tax deduction.

Local incentives

Some countries court family offices with incentives:

Research programs if considering multiple jurisdictions. Always consult qualified lawyers and tax advisors.

Best practices

Operating a private investment office is a continuous learning process. These practices increase effectiveness.

Have a clear mission. Define what success looks like. Purely financial metrics? Non-financial goals like educating the next generation? Document in "Wealth Mission Statement". Covers values and priorities. A clear purpose helps make consistent decisions.

Treat it like business. Apply the same rigour to wealth as to your startup. Set goals and KPIs. Review performance regularly. Be CEO of your wealth. Not a passive bystander. Develop an annual strategic plan.

Build the right team. If hiring or partnering, focus on quality over quantity. A small team of highly skilled, trusted individuals beats a larger bureaucratic staff. Look for flexible, innovative people. Not just corporate types waiting for instructions.

Leverage external expertise. No office can house the best expert in every field internally. Build a network of top external advisors. Use as needed. Top CPA for complex tax. Savvy attorney for investments and estate. Specialised consultants for due diligence. The family office coordinates these experts.

Focus on risk management. Preservation is as important as growth. Continuously assess risks. Market risks. Single investment risk. Operational risk. Diversification. Exposure limits. Insurance or hedging where appropriate. Do pre-mortems: "If this investment failed, why might that happen?"

Maintain financial discipline. Wealth can dwindle if costs spiral. Keep the family office lean. Review the budget regularly. Run like a startup in burn-rate mode. Unless you have excess cash to spare. Consider separating investment capital from personal use cash. Set yourself a "salary" or draw. Stick to that. Let the rest compound.

Foster transparency. If spouse, children, or others are involved, cultivate transparent communication. Regular family meetings. Discuss objectives and performance. Educates and aligns everyone. Some offices create educational programs for younger members. Invite them to investment meetings. Prepare for future responsibilities.

Stay agile. Beauty of private investment office: agility. Adapt to new opportunities or risks faster than large institutions. Don't become overly bureaucratic. Have structure, not rigidity. Keep dry powder (cash) for flexibility. Innovate. Consider new avenues as the world changes.

Measure performance. Track investments relative to benchmarks or targets. Beating a simple 60/40 stock-bond index? Venture portfolio adding alpha beyond public equities? Consider annual external review by investment consultant. Objectively assess allocation and results. Hold hired managers accountable.

Plan for succession. Even if it feels far off, plan for "what happens when I'm not around?" Identify a backup person who could run the office. Document key information. If the intended office continues for children, prepare them. Expose them to work as they grow. Bring the next generation into the fold via junior roles. Succession planning is consistently listed as the #1 challenge. Address early.

Common mistakes

Being aware of common mistakes helps you avoid them.

Launching too early. Creating a complete infrastructure without sufficient scale. Asset base under $20-30M? The cost of running the office eats up a large portion of returns. Start lean. Expand as justified. Don't let ego push you into an elaborate "office" just for the sake of it.

Poor hiring. Bringing in the wrong people. Unqualified relatives or advisors with misaligned incentives. It can be disastrous. Hire deliberately. Check references. Create compensation rewarding what you truly want. Long-term performance rather than activity metrics. Don't automatically put a family member in charge unless they have aptitude. Many failures result from inexperienced relatives given control without training.

Lack of governance. Without proper governance, issues multiply. Ad-hoc decision-making. No documentation. Lack of accountability. Can lead to significant losses. Missed opportunities. Even fraud. Introduce some governance. Keep minutes of important meetings. Track decisions. Have checks and balances.

Overconcentration. Many entrepreneurs have high risk tolerance. Sometimes make big, concentrated bets. Huge chunk into one stock or asset class. It can sometimes pay off. It can also backfire spectacularly. Locking too much in illiquid assets leaves you asset-rich but cash-poor. During downturns or when opportunities arise. Avoid "liquidity trap." Always maintain sufficient liquid assets.

Neglecting the back-office. Easy to focus on investing. Neglect mundane tasks. Reconciling accounts. Filing taxes. Disorganised finances lead to missed filings (with penalties). Unnoticed fees or errors. Unclear performance picture. Antidote: hire someone detail-oriented to mind books. Foundation of everything.

Overlooking legal nuances. Setting up a fancy structure but not maintaining it properly nullifies the benefits. Creating trust but forgetting to transfer assets into it. Commingling personal transactions with company funds. Happens more often than you think. Get good counsel. Educate yourself on basic rules. Treat rules as sacred.

Chasing fads. Some new investors get caught up in hype. Meme stocks. Crypto ICOs. Whatever's trending. Family Offices (especially new-money) that constantly chase the latest fad churn capital. Incurs fees/taxes for little gain. Stick to the investment policy for a reasonable period. Avoid "shiny object syndrome." Long time horizon. Don't need to follow the herd.

No exit strategy. Every investment should have an intended exit or monitoring plan. Common pitfall: "buying and forgetting." Investing in a private company. Not staying updated on progress. Set criteria for when to trim or rebalance marketable investments. For illiquid ones, keep the timeline in mind. Regular portfolio reviews force re-examination of each position.

Ignoring family dynamics. In multi-generational scenarios, ignoring conflicts can cause the office to implode. The founder sets up the office but never explains the plan to the children. When he passes, heirs fight or mismanage. Unprepared. Remedy: open communication. Formal governance, like family councils. Bring in mediators if needed.

Overextending yourself. Trying to do everything yourself. Manage every investment. Track every expense. Handle all paperwork. You'll burn out or let things slip. Identify areas where your input is most valuable. High-level allocation. Deal selection. Delegate or outsource the rest. Focus on big decisions and enjoy life.

Security negligence. Family offices deal with sensitive information. Lapse in security leads to wire fraud. Identity theft. Even physical threats. Being too high-profile attracts unwanted solicitation. Use secure channels. Limit who knows what. Consider structures that provide privacy, such as forming an LLC rather than using a personal name.

Real-World Examples

Let's look at how actual entrepreneurs have structured their family offices:

BLN Capital (Germany/Europe)

BLN Capital was founded by three young tech entrepreneurs who created and sold Kolibri Games for around €120 million in 2020. They hired Jan Voss as a dedicated manager to run their office and assembled a small team of investors and assistants. Jan also runs a newsletter called Cape May Wealth, dedicated to family office investing, which I highly recommend reading.

Their strategy mixes public markets with venture capital, focusing on mobile gaming (their area of expertise). They invest in numerous top-tier VC funds for broad exposure and also make direct angel investments.

An interesting challenge they faced was that, as a new family office, they needed to build a public persona to get access to the best deals. Unlike old-money families with established networks, they had to "fight to get in" to top funds.

💡
Lessons: BLN Capital learned to be very selective with deployments – with limited deals per year, each one counts substantially. They also found that while startup investing is exciting, it becomes time-consuming as the portfolio grows, requiring a clear strategy and the discipline to say "no" often.

Labora Family Office (US/UK)

Labora Family Office manages the Mackie family's wealth, which originated from the founding of City Electrical Supply in the UK. Established in 2014 and based in Dallas, Labora invests across real estate, venture capital, and private equity.

They "primarily invest in opportunities directly," looking at both established companies and startups. For example, they made a $7M Series A investment in a Silicon Valley tech startup (Waggl) – not what you might expect from an electrical supply fortune!

They also heavily invest in Texas real estate while diversifying across industries and geographies.

💡
Lessons: Labora shows how an industrial-wealth family can pivot to being a broad investor. They leverage their long-term perspective and have stepped into Series A tech investments, essentially acting like venture capitalists.

Addition Capital (UK)

Addition Capital is the London-based family office of Jay and Rumi Verjee. Rumi was a serial entrepreneur known for ventures like owning the Domino's Pizza franchise rights in the UK.

Established in 2018, Addition focuses on investments in small— to mid-size companies across sectors such as financial services, technology, and healthcare. It is not limited to the UK—it has made significant investments in San Francisco and Silicon Valley startups.

The Verjee family also remains involved in philanthropy via the Rumi Foundation, showing how the family office oversees both investments and charitable initiatives.

💡
Lessons: Addition demonstrates the global reach a family office can have. Just because they're based in London doesn't limit them—they find opportunities wherever they arise, acting as cross-border investors.

Final Thoughts

Private investment offices are compelling for founders. A personalised approach from a traditional family office. Efficiency of modern technology.

Founders maintain control and agency over capital.

What makes this powerful: flexibility. No one-size-fits-all model. Want to be a hands-on venture investor? Broad multi-asset allocator? Office adapts to your interests and strengths.

Key benefits are clear.

Control: You set a strategy aligned with goals.

Customisation: build a portfolio that reflects your unique risk tolerance and interests.

Comprehensive approach: coordinate investments, tax, estate planning, more.

Continued engagement: apply business skills to grow wealth.

Patience and continuous learning are essential. Markets have ups and downs. You'll adjust the course many times. Family office is a long game.

With foundation laid in this guide—sound structure, diversified strategy, good people, diligent oversight—you'll be positioned to navigate that journey.

Think of it as evolving. From "rich individual with brokerage account" to "CEO of your capital."

Requires professionalism and discipline. But with those in place, your wealth stands a far better chance of growing and lasting.

💡
Disclaimer: This content is for informational and educational purposes only. Nothing here constitutes financial, investment, legal, or tax advice, nor is it a recommendation to buy or sell any securities or assets. Your financial situation is unique—consult with qualified professionals before making any investment decisions.
Share Tweet Share Share Email

Read next