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I Family Offices Increasingly Backing Startups
Besides accelerators, hedge funds, and angel investors, family offices—the personal investment firms that manage the affairs of the ultra-rich—are increasingly becoming a driving force behind startups.
The past year has seen growing optimism and deal flow from family offices towards startups, according to new data by Silicon Valley Bank (SVB) Capital and Campden Wealth. Findings from the 2021 Family Office Report by SVB indicate that the average family office has 10 venture fund investments (47% of assets) and 17 direct deals (53% of assets). In comparison, in 2020, the average family office held eight venture funds and 10 direct deals.
Egypt’s ultra-rich Mansour family is a frontrunner in this arena. Billionaire Mohamed Mansour’s London-based Man Capital family office invests in private capital in companies within the oil and gas, education, healthcare, technology, telecoms, and real estate sectors. His son Loutfy is CEO of the London-based family office, which also has an operational VC arm called 1984 Ventures in San Francisco. Spotify, Fairmarkit, DiDi, Uber, Grub, and Airbnb are some of the industry names backed by Man Capital. Forbes estimated Mohamed Mansour’s real-time net worth at $2.5 billion as of December 12, 2021.
One of the world’s most discrete family offices, Mousse Partners, controlled by Chanel billionaires the Wertheimer brothers, also actively directly invests in startups. The New Yorkbased firm, which manages the wealth of Alain and Gerard Wertheimer, has backed restaurant chain Cava, Butler Hospitality and Beautycounter, according to Bloomberg. Alain and Gerard were each worth $31.6 billion, according to Forbes, as of December 12, 2021. Half-brother Charles Heilbronn heads the family office. The Sovereign Wealth Fund Institute estimates the family office’s current assets to be worth $89 billion.
The participation of younger generations in their family offices’ venture capital (VC) activity has also gained momentum. SVB found that in 2021, VC stands as the top-ranked area for Next Gens to be involved at 39%, compared to 33% a year ago. The significance attributed to VC transcends into hiring field professionals too. In 2020, the average family office staff included one VC specialist. By September 2021, this had doubled to two professionals on VC investments.
U.A.E.-headquartered HB Investments, the investment vehicle of Huda Kattan and family, also announced a few deals in 2021. In June 2021, the family office of the founders of beauty brand Huda Beauty announced participation in a $3 million extension seed funding round for edtech app, Uptime. HB Investments also backed spa and salon booking platform Fresha and resale retailer The Luxury Closet in the same month.
The family office was set up to support budding entrepreneurs at an early stage of venture development. Social network Clubhouse and Middle East unicorn Kitopi are also among the startups in their investment portfolio. In August 2021, the 38-year-old IraqiAmerican businesswoman was listed among Forbes’ list of America’s richest self-made women, with a net worth of $490 million. She also tops Forbes Middle East’s “Women Behind Middle Eastern Brands 2021” list.
Mohamed Mansour, with his son Loutfy
