going to be more active as LPs. So yes, there is an increased appetite for this risk basket. The investment rationale for families is that they are looking for a return of 300-500 basis points more than standard benchmarks. These larger returns should, over time, justify the risk of illiquidity. Co-Investing Q. Are Family Offices interested in Co-Investing? A. Yes. I would say that for many families, it is of great interest. Through co-investing, family offices are utilizing the sourcing and diligence talent inside of a venture or private equity firm. When evaluating an LP position, a family office may not only be looking for a fund investment, but it may also be looking to potentially work with that fund manager as a direct coinvestor. This structure enables
family offices to get some of the benefits of pure direct investing without a highly expensive and sometimes difficult to manage internal team. This is especially important as family offices look to streamline, leverage technology, and be not only more efficient but more effective. So again, some very large family offices are onboarding talent and building teams, but that is difficult. When they can get direct exposure where a fund manager is doing 99 percent of the heavy lifting, then that is something that can be very attractive. Crypto & Blockchain Q. What is the investment rationale for Family Offices in Blockchain and Crypto? A. Investors are attracted to the Blockchain/Crypto space because they feel that it is early stage, like the Internet might have been 30
years ago. They assume that there will be some big winners but there will also be some losers. Many single family offices are actively investing or at least taking a serious look. Q. Has investor interest in Blockchain/Crypto accelerated or decelerated over the past two years? A. From my experience I would say it is a notch or two lower than it had been, but there definitely is interest again, especially in a time when accomplishing real alpha is perceived to be difficult. I think it is getting harder and harder with public securities, without using extreme concentration or leverage, to get “outsized� returns, so other strategies are looking more attractive.
