After spending time with family offices, I’ve realized most people have a pretty shallow understanding of how they actually invest. At the simplest level, it's a vehicle that manages the wealth of a single family, anything from tens of millions to tens of billions.
Some operate like a retail investor with proprietary GP deal flow, usually with an investment team of one or two people. Others run multi-billion dollar operations with CIOs, analysts, and processes that look a lot like endowments. Sometimes you get a formal IC memo. Other times you get a WhatsApp message and a screenshot of a wire.
They vary a lot, but the common thread is flexibility. They move faster, take concentrated bets, and, unlike institutional investors, they don’t have to navigate pension-level bureaucracy to justify every decision.
The part most people miss is that they’re drowning in the same GP decks, quarterly reports, and email chains as the big institutions, but with a fraction of the personnel. When you’re getting the same materials endowments do, but you’re a team of two, it’s difficult to form a complete risk/reward profile. That’s how you end up allocating to managers with incomplete data, not because you don’t care, but because no one has the hours to stitch everything together.
As this investor class grows, and as more family offices push deeper into alternatives, they’re going to start demanding the same level of infrastructure their larger counterparts rely on. It’s only a matter of time before the software stack catches up.
We’re already seeing growing interest from family offices that want to bring some order to the chaos. They’re not trying to mimic big pensions, but they want enough structure to avoid missing something material.