A question I often get from my LinkedIn community is, “How do we approach Family Offices with our VC Funds?”. With so many funds starting up across the continent and global opportunities ranging from VCs to other investment vehicles that all seek to have Family Offices investments, it’s necessary to be clear that there are families and family offices who are interested in alternative investments; however, there are many options available to them so you have to make yours stand out.
I am approached almost daily by individuals and organizations with pitch decks and proposals with the hope that I may introduce them to Family Offices and my clients who may be interested in their offering. I can only imagine the amount of mail and contact the families, and their staff receive daily. And to be fair, cold calling is part of the game when you are selling. However, it helps to have the essential knowledge to help your success rate. I will share some of the top tips I think would be helpful, especially when reaching out to African Families.
- Context and understanding – When putting together a list of potential investors, research more about the family, the Family Business, The Family Office, or even the Philanthropy work they are invested in. One size fits all does not apply when reaching out to investors. Anyone with money willing to invest may seem like a good idea; however, the reverse does not apply. Family investors are not putting money into any good idea that crosses their path. There are higher chances of getting investors if you know where their interests already lie. It also gives them an indication that you are interested in them, not just their wealth. Family Offices and Families of wealth do not have endless amounts of money lying around with no use for it. They have their own interests and plans for their wealth. Which may or may not be investing in your fund or a great idea. More so, African investors have so many investment opportunities available to them in terms of expanding their current business interests. In most cases, they are in industries they have never diversified from, or they would instead put their funds into growing their existing businesses or projects. Chances of then taking funds and placing them elsewhere may be slim. So the second question should be, are they already putting their money anywhere outside their own businesses, and if so, where? And why? This establishes if there will be interest or uptake in whatever you put in front of them.
- Trust Building is necessary – There is a saying that implies that people don’t look at getting married on the first date. Equally so, families, their Offices, and their advisors will not jump on board on your first meeting. Trust must be earned and built. It’s probably easier to meet the family in spaces they are comfortable in, forums where they get to know you or your work, or to be introduced by trusted advisors or friends. The funds being looked for are never small, so it’s necessary for there to be trust. As a stranger on LinkedIn who works for and with Family Offices, I am not obliged to take your proposal to my clients because you have presented it to me and are offering a commission. If anything, this may indicate I have no ethics and respect for my client and therefore am willing to take payment for commission on proposals that may not be in my client’s best interest. Relationships between families and trusted advisors are long-standing and highly respected. Therefore it may be of help to understand what work I do for my clients and build a relationship with me before requesting access to a highly regarded and trust-built relationship. Trust takes time and communication, and reciprocation. Conversations around money can be contentious and more so in families of wealth and their interests. To be privy to these and find the right investor, it’s essential to build out the right relationships and be willing to nurture them with the understanding that decisions are not always made quickly and that not all people in the chain are decision-makers.
- Make it Easy. Have the next steps ready when you meet. Whether you are meeting the families, their advisors, or possible links to either, be well-researched and have facts at your fingertips. Sometimes opportunities come fast and unexpectedly. In the case, they do, don’t fumble. How do investors verify what you are working on? How do they verify who you are, what they will get from this experience, and how they get on board? They have probably heard the endless benefits of your particular investment option, but they have not heard about the “game changers” in your specific offering. Focus on those. And when there is interest, be quick to provide answers and information that helps make decision-making easy. Any difficulty may be off-putting. Also, be ready to say no if the terms of engagement are not favourable. Not all investments are suitable, and not all investors are suited for your fund.
- Be persistent in follow-up but do not hound. Because there is a show of interest or perceived availability of investment funds, this does not mean that the family should be contacted continuously and hounded into listening or engaging you or your organization.
I hope the above helps those looking to contact investors on the continent. Most importantly, there is no consolidated database or directory of names and contacts for family offices. Most family offices do not want to be known because such lists have a history of abuse. To find the families, you will need to attend events that may have their interests at heart. Social or business included. As with any industry that is being built, it may take time for investors to see the benefits of the investments. Keep educating, keep collaborating, and keep engaging. With more content going out, there is a high chance the investors may find you as much as you are looking for them. With little to no content, there will always lie a gap between what investors know and could be interested in and what you offer, which could be helpful in their wealth-building goals. The key is to be consistent.
Tsitsi Mutendi is a co-founder of African Family Firms, an organization that aims to facilitate the continuity of African family businesses across generations. She is also the lead consultant at Nhaka Legacy Planning and the host of the Enterprising Families Podcast.