Fwd: Steve: 5 take aways from our 300+ person family office gathering this week

Hi Steve - On Monday, we got a chance to do something that most emerging managers never get to do: ask family offices and other LPs exactly what they look for in an investment. For those of you who didn't make it to the event, here are some key takeaways (and be sure to RSVP for our next events): 1 - Lead with the Sizzle: Ira Perlmuter, who manages investments for the family that owns the Mall of America, suggested that managers should "lead with the sizzle." By sizzle, Ira meant that managers shouldn't be afraid to start the conversation with what makes their offering unique. Family offices have so many people vying for their attention that you need to stand out with a compelling value proposition right away or you probably won't make it past the initial screening. 2 - The majority of the investors on stage were family offices but we also had some other allocators giving their perspective. The one thing that almost every investor had in common, from a fund of hedge funds to a single family office, was that they all see hundreds of investment ideas for every one that they actually allocate to. On one panel in the morning, one investor said that they look at about 1,000 investments, engage with maybe 500 or so of those, take a serious look at about 100 from there and of the few dozen they meet with, they end up investing in maybe 2 but usually 1 fund. If you're raising capital for a fund or looking to get your company funded, that probably seems like long odds. If you're targeting one investor, it is, but the successful managers have systems in place to engage with hundreds of LPs so that they aren't only relying on one swamped investor to pick them out of the 1,000+ other opportunities. 3 - If you are an emerging manager you have to keep open to creative ways of getting out of the seeding stage. Some ideas floated by speakers and managers alike included discounting fees for share classes, JVing with a multi-family office, or allowing Co-GP investment layers into your strategy. Similar to takeaway #2, you have to realize how many options LPs have when it comes to allocating their capital and if you are coming to a meeting with less track record, less AUM, and less pedigree there has to be something in it for the investor to compensate for that. 4 - Impact investing is appealing to family offices, but they're skeptical. One family office spoke at length about sustainability and impact investing, which served as a reminder that family offices (and the families that they represent) are increasingly looking for a "triple bottom line" or some measurement of positive impact when it comes to their investments. If you've been to any of our family office events, you've probably spoken to at least a couple family offices that are looking to incorporate impact investing in their overall mandate. The trouble, however, as one private equity exec mentioned in the post-event cocktail hour is that there are so many GPs trying to pass off traditional investments as impact investments because they know LPs see it as important. That's made some investors more skeptical about whether it's truly an "impact investment" or not. Even in the cases where a manager or a company is presenting a true impact investment, there is some resistance among investors who see achieving a social impact as a low priority compared to their duty to generate high returns. I'm sure we'll cover impact investing in more detail as this trend continues and feature ever more investors talking about how they're incorporating social impact into their investments. 5 - Reference point is key. A big reason that we developed the Family Office Club community was to give family offices opportunities to meet other family offices and exchange notes, discuss co-investments, and learn from one another. After ten years, the family office community is more developed than ever and family offices rely on each other increasingly to validate investment strategies and confirm that a counterparty is credible. Anyone who has worked on Wall Street knows how important reputation is when you are looking to make a trade or establish a relationship. The same is true for family offices. So, building relationships with family offices, being a source of value, and establishing your industry reputation are all critical activities for you if you want to work with family offices. I hope you enjoyed this recap and if you want to stay connected in the family office community, join the Club: http://FamilyOffices.com/Association Richard C. Wilson (305) 503-9077 Family Office Club Qualified Family Office Professional (QFOP) 328 Crandon Blvd. Suite 223 Key Biscayne FL 33149 USA http://FamilyOffices.com To unsubscribe or change subscriber options visit: http://www.aweber.com/z/r/?LKwsrBzMHLRsjMzMLGys7LRGtMxsLIyMHKws