Here's Why Family Offices Are Keen To Invest In Startups

Family businesses need to be agile to understand risk to their investments

Opinions expressed by Entrepreneur contributors are their own.
You're reading Entrepreneur India, an international franchise of Entrepreneur Media.

Family businesses, no doubt, in the coming times will become just as popular as venture capitalists and angel investors. In fact, family businesses have been empowering startups through funding for a long now.

For Rishabh Mariwala, co-founder and director, Sharrp Ventures, funding startups holds potential.

Mariwala stated that tech funds and consumer funds, which his family office created, focused funds. Be it personal care products company like Nykaa, mattress company or beer company and currently edtech startups, Mariwala has involved mixed businesses in his investment plans over the next six. The challenges of medical or other investments were an eye-opener to bring transition in his strategy. This influenced his team to identify consumer-oriented stuff to be prioritised on the basis of business understanding.

Scope of growth

The entire ecosystem has evolved currently and the passion of entrepreneurs is appreciable. Addressing the types of entrepreneurs who looked for investment, Benaifer Malandkar, CIO RAAY-Patni Family Office, pointed the contrast. Adding value to businesses by establishing alignment followed by evaluation of other parameters has been Malandkar’s perception towards startup investment.

Consumer segment, fintech and digital content have been among some of the themes selected by RAAY team. Post the pandemic, the company has included AI, IoT and healthtech spaces as they are gaining attention considering the higher scope of innovation being experimented with.

Trends and initiatives taken to support startups

Private equity evolved in 2007 and Kotak was the first one to be launched. It was totally a fresh concept which grabbed the attention of investors. Rajmohan Krishnan, principal founder and managing director, Entrust Family Office, believes, “In Indian market, there are just a few investors who want to take risk and that too, ones with success track record.” He further quips most of the investors are interested in the allocation of funds for second and third generation businesses. According to Krishnan, the mature investors are not in the favour of the asset class and still in the contemplation phase.

He further exclaimed that his team essays the role of board observers as a part of investment. Tracking business performance and extending assistance to the organization. The company can stay relieved as informed decisions are made when investors get involved in their operations. Thus, family business investments can add value to the business growth of startups by and large.

ROI for family businesses

The reasons for pursuing the role of family business investment influence the entire process along with the understanding of startup ecosystem. Munish Randev, founder and CEO, Cervin Family Office & Advisors, asserted that returns are mostly the intent for some families to invest while others may just look for equity returns. Getting acquainted with the behaviour of asset class, experience and understanding the scaling up process of startups are some of the learnings for the family.

Randev further elaborated that intent of family business investment can also be to expand their main business. At the same time, being the part of board management or becoming a board member depends on the ticket size of an investment. Randev opined, “Return becomes the outcome of multiple factors and it is not a standalone figure.”

Collaboration factor amidst investment

Mariwala clarified that collaboration scope after family investment depends on the business plan or objective. Privately held businesses are likely to have linkages or collaborate when they participate in VC or PE funding.

The Bottom Line

The transition of businesses is not under human control, so, the disruption can be expected. Family businesses need to be agile on understanding risk to their businesses. Allocation of wealth and moving them at a safer space can address the situation of business disruption. In short, ideation, knowing the risks and investing rightly are essential ways to ensure smooth operation of family business investment.


Jim Belushi Reveals the Hardest Thing He's Ever Done

The actor-turned-entrepreneur, who stars in the second season of his reality series Growing Belushi, says the Green Rush has been more like a crawl, but it's well worth it.

How This Clothing Designer Launched a Side Hustle Making Customizable Grazing Boards

The founder of ME'N'U Grazing LA shares her side hustle journey and her advice for anyone thinking about starting their own business.

Going Public Series Premiere, Watch and Click-to-Invest Now on!

Get ready to watch the first of its kind show where viewers can invest in featured deals while they watch!

Delivering Hospitality to Online Audiences

Interview with Garry Kanfer (Kissaki Sushi) about digital marketing and delivering the restaurant experience to customers at home.

Why This Mom Entrepreneur Is All About Quarterly Planning

The founder of Hustle Like a Mom shares her tips for working moms trying to run a business between drop-off and pick-up.

Build A YouTube Following With Authentic Content

Interview with YouTube Star Sam Zien The Cooking Guy about growing his popular YouTube channel and restaurant empire.

This Celebrity Talent Manager Is Offering a 12-Step Online Course on the Business of Acting

Jamie Freed is known for discovering Selena Gomez and managing celebrities like Paris Hilton. Now he's helping actors learn about the business of acting through his 12-step online course.

Video: Random Act of Kindness at Dollar General Store Goes Viral

Cashier wins hearts with her display of compassion at an Illinois store.

This Entrepreneur's Charity-Driven Startup Was Acquired in Less Than 2 Months

The founder and CEO of CharityPops NFT talks about how his company gives back to charities and how his platform got acquired in under 60 days.

This Company Just Launched a Comprehensive Label for Measuring a Fashion Product's Impact on People and the Planet

While we're used to seeing nutrition labels on food, the founder and CEO of Nisolo says he created the sustainability facts label to protect people and the planet.

She Brought a Baby to the Boardroom While Asking for $1 Million. There's No Way That Worked...Right?

Would you dare to try the high-risk, high-reward strategy of bringing a small child to your investment pitch?

Want to Sell Better Through Your Online Store? You Might Be Overlooking This Important Aspect of Digital Marketing.

The founder and CEO of QMocha explains how his Shopify app will work with your existing product images.

This Mother and Entrepreneur Wrote a Book to Help Adults and Kids Learn About Their Microbiome

The founder of Seed Health and author of 'A Kids Book About Your Microbiome' shares why she's empowering each of us to see ourselves as superorganisms.

You've Got a Great Invention. Now How Do You Get People to Buy It?

It's a good idea to start a business by solving a problem, but make sure to consider who is actually paying for your solution.

How to Create Video Content People Will Actually Watch

The founder of Patrice Poltzer Creative shares video tips that will help you attract your audience and keep them engaged.

Discover Entrepreneur Series

Whether you need advice on how to get your business off the ground or you’re just looking for inspiration, our video series have something for everyone. Browse our library below to find a series that speaks to you and your interests.

  • An original series streaming weekly where you can Click-to-Invest while you watch. THEIR JOURNEY. Your decision.
  • Your favorite pitch show is back with new entrepreneurs pitching Entrepreneur's investors.
  • Host Nicole Walters interviews small business founders to discuss their unique challenges and experiences running and growing a business. 
  • Jessica Abo covers the causes people care about, the powerful work they do and how they got to where they are in the first place.
  • Bestselling author, Ben Angel, takes his audience on a journey into the entrepreneurial mind to uncover why we do what we do through his powerful short films and educational videos so you can unleash your ideas and potential.
  • Watch our staff interview top entrepreneurs and report on location in these exclusive videos.