Selling a business is often just the beginning of a whole new game.
After you exit, you're suddenly faced with a new challenge of managing significant wealth. This isn't just about picking some stocks or hiring random advisers. It is about designing an operating system to protect and grow your capital over decades.
That's where private investment offices come in. Think of them as a personal investment company – a structure that lets you run your money with the same focus and strategic thinking you applied to building your business.
In this guide, we'll explore how modern founders set up lean, tech-enabled family offices (even with under $300M in assets) to maintain control of their wealth. We'll cover everything from structure and strategy to operations and common pitfalls.
This is your playbook for turning entrepreneur mode into investor mode – without giving up agency over your hard-earned capital.
What Is a Private Investment Office?
Private investment offices are essentially scaled-down versions of traditional family offices. They are structures designed to manage wealth for high-net-worth individuals or families, focusing on investment activities.
The family office concept dates back to the 19th century when families like Morgan and Rockefeller created dedicated teams to manage their vast fortunes.
But today, you don't need billions to benefit from this approach.
Modern technology and service providers now make it possible to create a lean family office setup starting with as little as $30-50 million in assets. In fact, there's a growing recognition of what some call the "service desert" faced by successful founders:
- Traditional wealth managers offer cookie-cutter solutions that don't match your ambitions
- Big private banks focus on much larger clients (and often just sell products)
- DIY investing doesn't provide the structure or expertise needed for complex wealth
A private investment office fills this gap by providing a personalised, comprehensive approach to managing your capital with full control and flexibility.
Single vs. Multi-Family Offices
There's an important distinction here:
- Single-Family Office (SFO): Serves just one family or individual
- Multi-Family Office (MFO): A firm that serves multiple unrelated clients
A private investment office is typically a single-family office – it's your dedicated structure. Sometimes, the "digital" or "virtual" label simply means it's scaled appropriately for the wealth level and leverages technology and outsourcing rather than a large in-house staff.
Key Benefits of Private Investment Offices
Why do founders create these structures instead of just handing money to a private bank?
- Control and customisation: You set the strategy aligned with your goals and values
- Holistic planning: Integrating investments with tax, estate, and philanthropic planning
- Deal access: Ability to source and participate in private deals that traditional managers can't offer
- Privacy: You keep financial matters in-house
- Flexibility: No bureaucratic mandates or cookie-cutter approaches
Most importantly, a private investment office lets you remain actively involved in the investment process. Many entrepreneurs enjoy the challenge of investing and want to apply their business skills to grow their wealth.
Remember: Once you've created wealth, managing it becomes a whole different game. The private investment office is your vehicle to professionalise that.
Structure and Governance: Run Your Wealth Like a Business
Setting up a private investment office means treating your wealth like a business, with a clear structure, governance, and operational systems.
Entity and Legal Structure
First, you'll need the right legal setup. Common structures include:
- LLC (most popular in the US)
- Family Investment Company (FIC) (common in the UK)
- S-corporations or C-corporations (less common)
Many offices use multiple entities. For example, one entity (OpsCo) might employ staff and handle operations, while separate entities hold various investments for liability protection or tax efficiency.
The choice of jurisdiction matters too. Some families incorporate in tax-friendly or privacy-focused locations like Delaware, Wyoming, Singapore, or Dubai's DIFC. The UAE, in particular, has been attracting family offices with favourable tax policies and updated regulations that make the setup easier.
Read our Family Office Location Guide for more information about different jurisdictions.
Bottom line: Consult with qualified legal and tax advisors on an optimal structure that balances tax efficiency, compliance, asset protection, and admin simplicity.
Governance and Roles
Good governance is essential for building a robust private investment office. Start by defining the mission and scope:
- What are your primary objectives? (capital growth, income, preservation, impact, etc.)
- What level of risk tolerance makes sense for your situation?
- How will decisions be made?
Clear processes prevent impulsive or emotional decisions even in a one-person office. Consider creating an investment policy statement that documents your philosophy and guidelines.
Clearly delineate roles if others are involved (spouse, children, friends). Who has the authority to make which decisions? What thresholds require consultation? Some founders set up an investment committee or advisory board of trusted experts who periodically review strategy.
As one best-practice guide puts it: "Your family office structure should include a mission, advisory boards or meetings, and documented processes for decision-making and information sharing."
Lean Team vs. Outsourcing
A digital family office typically keeps staffing lean. Many start with no full-time staff beyond the principal. Instead, they rely on external advisors (lawyers, CPAs, investment consultants) and perhaps a part-time bookkeeper or executive assistant.
As complexity grows, you might hire one or two key people:
- A CFO/financial controller to handle accounting, reporting and cash management
- An investment specialist to help manage investments and/or evaluate deals
- A generalist "family office CEO" to run day-to-day operations
However, hiring full-time staff is expensive and can cost $1.5m-$2m to run operations with even a few full-time staff. That's why outsourcing is common for non-core functions. Many family offices outsource tax, accounting, legal work, and investment management for certain asset classes.
The virtual family office concept means you have a virtual team of best-in-class experts on call, coordinated by a central person (who might be you or an external advisor).
Risk Management and Controls
Corporate governance principles apply here as well. Implement internal controls for handling money, for example:
- Dual signatories for large transfers
- Regular reconciliations of accounts
- Strong cybersecurity practices
- Adequate insurance (umbrella liability, D&O insurance if applicable)
Family offices can be targets for cybercrime or fraud, so don't skimp on security measures. A 2024 survey from Deloitte revealed that cybersecurity is a top concern for family offices globally. Over 43% of family offices worldwide experienced a cyberattack in the past two years, with half suffering multiple breaches. While many family offices have been impacted, only a small percentage feel they are "very well protected".
Regularly assess different types of risk – investment risk, operational risk, and regulatory risk – and have contingency plans. What happens if you're incapacitated? Who can step in to manage the assets? Some families draft a "family continuity plan" to address this matter early.
Setting Up the Family Office: Step-by-Step Guide
Let's break down the process of establishing a private investment office:
1. Clarify Your Goals and Scope
Start with the "why" – what do you want your family office to achieve?
- Are you focused on preserving wealth for future generations?
- Do you want to actively grow capital through direct investments?
- Is philanthropy a major component?
- How important are non-investment services like property management?
For many ex-founders, the goal is a balanced approach: preserve and grow wealth while staying involved through direct investments. Also consider your family situation—if you have children, the office's purpose might include educating the next generation.
2. Choose the Right Structure and Jurisdiction
Engage legal counsel to form the appropriate entity (or entities). Consider:
- Tax efficiency (both income and estate/inheritance tax)
- Asset protection
- Administrative complexity
- Regulatory requirements
Make sure you understand the structure and feel comfortable with its complexity. Remember regulatory definitions, too – in the US, a single-family office can be exempt from registering as an investment advisor (as long as you only manage your family's funds).
3. Establish Governance and Policies
Before making investments, develop your Investment Policy Statement that codifies:
- Risk tolerance
- Target asset allocation
- Liquidity needs
- Any constraints (ethical restrictions, concentration limits, etc.)
- Decision-making processes
Also, outline operational policies—how often you will review performance reports, who can move funds, etc. These foundations may seem tedious, but they prevent ad hoc chaos later.
4. Build Your Team (People and Advisors)
Decide which functions you need in-house versus outsourced. Early on, you might mainly rely on external advisors:
- A private banker or broker for executing trades
- An attorney for legal work
- An accountant for taxes
If your volume of activity grows over time, you may hire dedicated staff. Always check references and ensure absolute trustworthiness—beyond technical skill, integrity is paramount in anyone handling your personal financial affairs.
5. Set Up Infrastructure and Accounts
With structure and people in place, the necessary bank and brokerage accounts can be opened, assets can be transferred into the new entities, and any needed credit lines can be established.
Many family offices maintain relationships with multiple banks in different countries to diversify their portfolios and access local deals. Make sure that signing authorities and online access are correctly configured.
6. Implement Technology and Reporting Systems
Early on, it might be tempting to manage everything in spreadsheets. This becomes inefficient as complexity grows. Consider implementing family office software solutions like Addepar, Masttro, or Asora.
These platforms can:
- Aggregate data from multiple accounts
- Track public and private investments
- Provide performance reporting
- Store documents securely
The goal is to replace clunky Excel with a modern dashboard of your entire net worth. When choosing software, consider features like multi-asset class support, security, and collaboration capabilities.
7. Develop an Investment Strategy and Asset Allocation
Now, for the core portfolio, decide how to invest your capital. Create a target asset allocation that meets your objectives and risk appetite. For example:
- 40% public markets portfolio (stocks/bonds)
- 20% real estate
- 20% private equity/venture
- 10% alternative strategies
- 10% cash reserves
Every family is different. Some entrepreneurs invest heavily in what they know (e.g., tech startup investing), whereas others prefer to diversify away from their industry.
Even if you can't hire a full time Chief Investment Officer (CIO), consider bringing someone on a fractional basis to help you create your asset allocation and monitor your portfolio.
Plan for liquidity. If you lock too much wealth in illiquid investments, you might miss opportunities or face cash crunches. Many family offices keep a reserve fund for unforeseen needs.
8. Launch and Continually Refine
After the initial deployment, your office will officially be running. From here on, it's about monitoring, managing, and adjusting.
Schedule regular check-ins:
- Monthly cash flow reviews
- Quarterly performance and strategy reviews
- Annual comprehensive assessments of goals vs. results
Be ready to adapt as the investment environment or your life circumstances change. Also, remain vigilant about costs—track how much running the office costs relative to the benefits and, most importantly, the investment returns it can generate.
Investment Strategies for Private Investment Offices
One major advantage of having a private investment office is the freedom to pursue a broader range of asset classes and strategies than a typical retail investor. Let's explore common investment approaches:
1. Public Market Portfolio (Stocks and Bonds)
Nearly every family office maintains a core portfolio of public securities for liquidity and diversification. This typically includes:
- Equities: Individual stocks, ETFs or mutual funds for growth
- Fixed income: Bonds or bond funds for stability and income
The exact mix depends on your risk tolerance and goals. Digital family offices often hire external managers (or fractional CIOs), while others design their portfolios using a passive approach and low-cost index funds.
Because entrepreneurs often have higher risk tolerance, family offices may be more equity-heavy than traditional wealth managers would recommend. For instance, if growth is a priority, you might target 60-70% in equities, accepting higher volatility for better long-term returns.
The public portfolio often serves as the liquid core – something that can be drawn on for cash needs or rebalanced to seize other opportunities.
2. Alternative Assets
Family offices typically allocate to alternative investments, seeking higher returns and diversification:
Private Equity (Buyouts and Funds)
This refers to taking ownership stakes in private companies. You might:
- Invest as a Limited Partner in private equity funds
- Make direct deals, co-investing alongside PE firms or other family offices
- Acquire companies outright
The benefit of PE is higher returns than public markets due to illiquidity premium and active management. However, you lock up the capital for years, so commit only to what you won't need in the near future.
Also, diligence the funds you back; top-quartile funds significantly outperform average ones. As one family officer noted, be selective and "very careful where to deploy the money" – a few poor deals can drag down overall performance.
Venture Capital and Direct Startup Investing
This subset of private equity has become extremely popular among tech entrepreneurs turned investors. Family offices have become major players in venture financing – 35.5% of all global capital invested in startups in 2022 came from family offices.
You can access ventures in three ways:
- Investing in VC funds as an LP
- Directly investing in startups (angel investing or as a part of larger rounds)
- Participating in syndicates or platforms
Each has pros and cons. VC funds provide diversification but charge fees and have long lockups. Direct investing gives you more control and potentially better terms but requires time and expertise.
Many first-generation family offices dive headfirst into direct startup investing – it's exciting and leverages their entrepreneurial experience. For example, BLN Capital (the Kolibri Games founders' office) invests in numerous early-stage startups, especially in mobile gaming, where they have domain expertise.
One lesson they shared: at first, "every VC ticket sounds great" when you're surrounded by pitches, but you must become more strategic. Develop criteria to filter deals and look at your deal flow as a portfolio – not just one shiny startup at a time.
Remember that venture portfolios require follow-on reserves and 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 staple of family office portfolios. It provides income, inflation hedging, and potential appreciation. Depending on your interest, you could invest:
- Passively: Through REITs or real estate funds
- Actively: Buy properties directly
Direct ownership gives you control but requires dealing with property management. Often, family offices hire speciality property managers or partner with operators.
Watch concentration and liquidity. Real estate deals are chunky and illiquid, so ensure diversification (by type and location) and avoid over-leverage.
Hedge Funds and Alternative Strategies
Hedge funds (long/short equity, global macro, etc.) and alternative credit can play a role, though many have been underwhelmed by high fees and mixed performance.
One notable trend is interest in long/short strategies around liquidity events – for example, before selling a business, using strategies to generate losses for tax purposes or hedge market exposure.
Impact Investments and ESG
Many modern family offices incorporate impact investing – allocating capital to ventures that deliver social or environmental benefits alongside returns. This might include:
- Renewable energy projects
- Education ventures
- Social enterprises
Younger wealth creators' "generational priorities" increasingly include social responsibility. If these values align with yours, carve out a portion of your portfolio for impact investments across any asset class.
Digital Assets (Cryptocurrency and Blockchain)
According to a 2024 survey, approximately 39% of family offices are either already investing in cryptocurrency or looking into it. Interest is especially high among smaller family offices.
Exposure can be gained through:
- Directly buying coins (Bitcoin, Ethereum)
- Investing in crypto funds
- Backing blockchain startups
However, you must be careful. The crypto space comes with unique risks:
- Custody risk (securing private keys)
- Hacking and cybercrime (77% of family offices cited this as a major concern)
- Regulatory uncertainty (74% point to unclear regulations as a challenge)
Best practices: use reputable custodians, diversify across several assets, and allocate only a small portion of your total portfolio (typically 1-5%).
Portfolio Construction and Management
An effective family office portfolio blends these elements – a base of traditional assets and a selection of alternatives for alpha and diversification.
On average, family offices globally have allocated about 40% of their portfolios to alternatives. The attraction is clear: alternatives have been a major source of returns in a low-yield world.
Focus on managing:
- Liquidity: Stagger commitments to illiquid funds
- Vintage diversification: Invest across different years and market cycles
- Leveraging your strengths: Allocate more to areas where you have expertise
Also, consider co-investment opportunities with other families or funds. Co-investing lets you put more money into working on attractive deals without paying fund fees.
Lastly, maintain discipline with rebalancing. If one part of your portfolio soars or crashes, periodically rebalance to your target weights unless you have a tactical reason not to.
Operational Infrastructure: Tools and Systems for Efficiency
Running a modern private investment office requires an operational backbone to handle tracking, reporting, and collaboration. Here are the key components:
Financial Reporting & Aggregation
Without proper aggregation, you might not know your actual exposure or performance across dozens of accounts. Consider using specialised family office reporting software or a consolidated reporting service.
Tools like Asora, Addepar, Black Diamond, or FundCount can:
- Pull data automatically from financial institutions
- Allow manual input of private holdings
- Generate performance reports and asset allocation breakdowns
- Provide custom metrics and dashboards
If you don't want to manage software yourself, outsourced reporting providers can handle this for you.
Accounting and Bookkeeping
Your office needs general ledger accounting, which tracks income, expenses, and balance sheets. If you have just one entity and a few transactions, QuickBooks or Xero with a knowledgeable bookkeeper might suffice.
As complexity grows, you may need more robust accounting systems. Essential tasks include:
- Reconciling accounts
- Tracking capital calls and distributions
- Recording valuation changes
- Preparing financial statements
Many family offices close their books monthly or quarterly. It's wise to have an independent accountant review periodically.
Document Management and Collaboration
A family office accumulates a lot of documents – legal contracts, investment agreements, tax forms, statements, etc. Implement a secure document management system early.
This could be a well-structured encrypted cloud folder or a purpose-built vault. The system should allow quick retrieval of documents by category. Consider sharing secure access with key advisors as needed.
Standard tools like Slack or Microsoft Teams can be useful (with appropriate security settings) for day-to-day collaboration among your team.
Banking and Cash Management
Ensure you have a robust setup for cash management, including:
- The right bank accounts (with decent yield for idle cash)
- Treasury management for larger balances
- Multi-currency accounts, if needed
Many family offices maintain a cash buffer or rainy-day fund for each entity to cover 1-2 years of expenses or commitments. If your cash flows are complex, maintain a forecast – nothing worse than having to fire-sell an investment because you forgot a capital call is due.
Technology Security
Implementing strong IT security is a must. Consider:
- Using dedicated devices for banking
- Keeping antivirus/anti-malware up-to-date
- Employing encrypted communication for sensitive information
- Conducting periodic security audits
Educate any family members or staff on phishing risks. Wealthy individuals are high-value targets. Simple security measures like verifying transfer requests through a second method can prevent fraud.
If you are exploring a tech stack for your family office, check out Simple - they have useful resources and list of technology service providers dedicated to serving family offices.
Legal, Tax, and Regulatory Considerations
It is crucial to take care of legal and tax considerations at the start. While specifics vary by jurisdiction, here are key points:
Tax Planning
A liquidity event (like selling a company) often triggers significant tax planning needs. Your family office structure should optimise taxes legally through the following:
- Entity selection: For example, a UK Family Investment Company can reduce inheritance tax exposure and allow investment growth to be taxed at corporate rates (lower than personal rates).
- Location strategies: Some families utilize tax-neutral jurisdictions, especially if they're globally mobile. The UAE, for instance, offers 0% tax on many types of income and has become a magnet for family offices.
- Ongoing tax management: This includes tax-loss harvesting, charitable deductions, and efficient handling of private investments. For example, Qualified Small Business Stock (QSBS) exclusions in the US can be valuable for startup investments.
Create a tax calendar to track filing requirements across jurisdictions. Missing a compliance filing can be costly.
Regulatory Compliance
A single-family office is typically less regulated than other financial entities, as long as you truly only manage your own family's money.
For example, the US Dodd-Frank Act provides an exemption for single-family offices from registering as investment advisers under specific criteria. Similarly, in Dubai's DIFC, single-family offices don't require licensing as financial advisors.
Nevertheless, family offices must follow applicable laws and regulations:
- Anti-money laundering (AML) rules
- Data protection laws (especially under GDPR in Europe)
- Reporting requirements (like FATCA and CRS for foreign accounts)
If you start pooling money with others beyond your immediate family, you might inadvertently become an investment company subject to securities laws. Most family offices avoid this by only dealing with family assets.
Estate and Succession Planning
Part of legal planning is ensuring smooth wealth transfer to the next generation (if relevant). Even if you're young, put in place basic estate documents:
- Wills
- Trusts if appropriate
- Powers of attorney
Many family offices create a holding trust or foundation that owns the investment company. This provides continuity beyond the founder's life and potential estate tax benefits.
Incorporate estate planning into your structure early. It's much easier to move assets into trusts when you first set up the office than later when they've grown in value.
Philanthropic Vehicles
If giving back is part of your goals, consider setting up a family foundation or donor-advised fund (DAF). Family offices often oversee charitable entities alongside investments.
A private foundation can involve family members and establish a legacy of philanthropy. It has tax advantages but comes with distribution requirements (in the US, about 5% of assets annually) and administrative overhead.
A donor-advised fund is a simpler option. It is essentially an account at a sponsoring charity where you park funds for future giving and receive an immediate tax deduction.
Local Incentives
Some countries actively court family offices with incentives:
- Singapore offers tax exemptions for approved family office structures
- The UAE's free zones (like DIFC, ADGM) offer regulatory ease and residency visas
- Various US states compete with favourable trust laws
Research such programs if you're considering multiple jurisdictions. But remember to always consult with a qualified lawyer and tax advisers.
Best Practices
Operating a private investment office is a continuous learning process. These best practices can significantly increase your effectiveness:
Have a Clear Mission and Plan
Define what success looks like for your family office:
- Is it purely financial metrics (achieve a target return)?
- Does it include non-financial goals (educating the next generation and supporting causes)?
Document this mission in a "Wealth Mission Statement" that covers your values and priorities. A clear purpose helps you make consistent decisions.
Treat It Like a Business
Apply the same rigour to your wealth that you did to your startup:
- Set goals and KPIs
- Review performance regularly
- Be the CEO of your wealth, not a passive bystander
Develop an annual "strategic plan": this year's plan might include " deploying $X into 5-6 new investments, implementing a new reporting system, setting up a family trust," etc.
Build the Right Team
If you hire or partner with others, focus on quality over quantity. A small team of highly skilled, trusted individuals beats a larger bureaucratic staff.
Look for flexible and innovative people, not just corporate types waiting for instructions. Each early hire should act like a co-founder, wearing multiple hats aligned with your vision.
Leverage External Expertise Strategically
No family office can house the best expert in every field internally. Build a network of top external advisors and use them as needed:
- A top CPA for complex tax work
- A savvy attorney for investments and estate matters
- Specialised consultants for due diligence on specific opportunities
The office's role is to coordinate these experts and ensure they're working in concert for you. Maintain good relationships and don't hesitate to get second opinions on major issues.
Focus on Risk Management
Preservation of capital is as important as growth. Continuously assess risks:
- Market risks
- Single investment risk
- Operational risk
- Any other risk you can think of
Best practices include diversification, setting exposure limits, and using insurance or hedging where appropriate. Do pre-mortems: "If this investment failed, why might that happen and how would we manage the outcome?"
As one family office CIO said, "What is paramount is to monitor risk for the family." Every investment should be evaluated not just on return but also on risk.
Maintain Financial Discipline
Wealth can dwindle if costs spiral. Keep your office lean and regularly review its budget. Run it like a startup in burn-rate mode, unless you genuinely have excess cash to spare.
Consider separating investment capital from cash designated for personal use. Many families institute a form of governance on distributions – perhaps setting yourself a "salary" or draw and sticking to that, allowing the rest to compound.
Foster Transparency and Communication
If your spouse, children, or other family members are involved, cultivate transparent communication. Regular family meetings to discuss the wealth's objectives and performance can educate and align everyone.
Some family offices create educational programs for younger members, inviting them to investment meetings or seminars to prepare them for future responsibilities.
Document important decisions and reasoning – this can be useful later if questions arise.
Stay Agile and Adapt
The beauty of a private investment office is agility – you can adapt to new opportunities or risks faster than large institutions.
Don't become overly bureaucratic with your processes. Have structure, but not rigidity. Keep some dry powder (cash) for flexibility.
Innovate. Consider new investment avenues as the world changes. Being on the cutting edge can be a competitive advantage, especially for a tech-savvy founder.
Measure Performance and Benchmark
Track how your investments are doing relative to appropriate benchmarks or targets. Are you beating a simple 60/40 stock-bond index? Is your venture portfolio adding alpha beyond public equities?
Consider having an annual external review by an investment consultant who can objectively assess your asset allocation and results. Hold any hired managers accountable to benchmarks.
Plan for Succession
Even if it feels far off, plan for the "what happens when I'm not around?" scenario. Identify a backup person who could run the family office if you cannot, and document key information.
If you intend the office to continue for your children, prepare them or at least expose them to its workings as they grow up. Many family offices bring the next generation into the fold via junior roles.
Succession planning is consistently listed as the #1 challenge for family offices – it is better to address it early.
Pitfalls and Common Mistakes to Avoid
Being aware of common mistakes can help you steer clear of them. Here are the frequent issues:
Launching Too Early
One mistake is creating a full-fledged family office infrastructure without sufficient scale. If your asset base is under $20-30M, the cost of running an office can eat up a large portion of returns.
Start lean and expand as justified. Don't let ego push you into setting up an elaborate "office" just for the sake of it.
Poor Hiring and Talent Management
Bringing in the wrong people – whether unqualified relatives or advisors with misaligned incentives – can be disastrous. Some family offices hire a big-name banker expecting magic, but it creates conflict if that person doesn't align with your values.
To avoid this, hire deliberately, check references, and create compensation structures that reward what you truly want (e.g., long-term performance rather than activity metrics).
Don't automatically put a family member in charge unless they have the aptitude; many family office failures are the result of inexperienced relatives being given control without proper training.
Lack of Governance and Discipline
Without proper governance, issues can multiply like a snowball:
- Ad-hoc decision-making (investments made on a whim)
- No documentation of decisions
- Lack of accountability (no performance reviews)
This can lead to significant losses, missed opportunities, or even fraud. Introduce at least some governance: keep minutes of important meetings, track decisions, and have checks and balances.
Overconcentration and Illiquidity
Many entrepreneurs have a high-risk tolerance and sometimes make big, concentrated bets, putting a huge chunk into one stock or asset class. While this can sometimes pay off, it can also backfire spectacularly.
Similarly, locking too much wealth in illiquid assets can leave you asset-rich but cash-poor during downturns or when opportunities arise. Avoid the "liquidity trap" by always maintaining sufficient liquid assets.
Neglecting Back-Office and Accounting
It's easy to focus on investing and neglect the mundane tasks of reconciling accounts and filing taxes. Disorganised finances can lead to:
- Missed tax filings (with penalties)
- Unnoticed fees or errors
- Unclear picture of performance
The antidote is hiring someone detail-oriented to mind the books – it's the foundation of everything.
Overlooking Legal and Tax Nuances
Setting up a fancy structure but not maintaining it properly can nullify the benefits. For instance, someone might create a trust but "forget" to transfer assets into it, or commingle personal transactions with company funds. This happens more often than you think.
Get good counsel and educate yourself on the basic rules of your structure. Treat those rules as sacred.
Impatience and Chasing Fads
Some new investors get caught up in hype – whether it's meme stocks, crypto ICOs, or whatever's trending. A family office that constantly chases the latest fad can churn capital and incur fees/taxes for little gain.
Stick to your investment policy for a reasonable period to avoid "shiny object syndrome." Remember that you have a long time horizon and don't need to follow herd behaviour.
Lack of Exit Strategy
Every investment should have an intended exit or monitoring plan. A common pitfall is "buying and forgetting" – investing in a private company and not staying updated on its progress.
Set criteria for when to trim or rebalance marketable investments. For illiquid ones, keep a timeline in mind. Regular portfolio reviews force re-examination of each position.
Ignoring Family Dynamics
In multi-generational scenarios, ignoring potential conflicts can cause the office to implode. Perhaps a founder sets up the office but never explains the plan to the children, and when he passes, the heirs fight or mismanage because they are unprepared.
The remedy is open communication, formal governance like family councils, and bringing in mediators if needed.
Overextending Personal Bandwidth
If you try to do everything yourself—manage every investment, track every expense, handle all paperwork—you'll burn out or let things slip through the cracks.
Identify areas where your input is most valuable (perhaps high-level allocation and deal selection), and delegate or outsource the rest. This will allow you to focus on big decisions and enjoy life.
Security and Privacy Negligence
Family offices deal with sensitive information. A lapse in security can lead to wire fraud, identity theft, or even physical threats. Being too high-profile can attract unwanted solicitation.
Use secure channels, limit who knows what, and consider structures that provide privacy (like investing via an LLC rather than your 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.
Labora Family Office (US/UK)
Labora Family Office manages the Mackie family's wealth, which originated from building 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.
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 in sectors like 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.
Final Thoughts
Private investment offices represent a compelling option for founders and entrepreneurs - a personalised approach of a traditional family office with the efficiency of modern technology. They allow founders to maintain control and agency over their capital.
What makes this approach particularly powerful is its flexibility. There's no one-size-fits-all model – whether you want to be a hands-on venture investor or a broad multi-asset allocator, the private investment office adapts to your interests and strengths.
The key benefits are clear:
- Control: You set the strategy aligned with your goals
- Customisation: Build a portfolio reflecting your unique risk tolerance and interests
- Comprehensive approach: Coordinate investments, tax, estate planning, and more
- Continued engagement: Apply your business skills to grow your wealth
Patience and continuous learning are essential for those who choose this path. The markets will have ups and downs, and you'll likely adjust course many times. A family office is a long game.
With the foundation laid in this guide – sound structure, diversified strategy, good people, and diligent oversight – you'll be well-positioned to navigate that journey.
Think of it as evolving from being a "rich individual with a brokerage account" to becoming the CEO of your capital. It requires professionalism and discipline, but with those in place, your wealth stands a far better chance of growing and lasting.
That is part of the Game. Let's Play to Win.
