As a syndicator or fund manager, it is always your job to be looking for investors. Even if you already have deals going on, or you don’t have any deals that you’re looking for investors right now, shopping for them is the most important thing that you can be doing every day. When it comes to investors, one of the best sources is a family office. Family offices have a lot of money to invest, but they’re also very, very smart. So let’s go through 10 tips on getting a family office to invest in your offer.

Family Offices can be a great investor base for you. They are led by very smart people who know the business well, which is a challenge to sell to them because you certainly can’t hoodwink them. However, they also have a lot of money. If they’ve decided that you’re a good fit, most of the time they invest with little additional oversight. They just want to make sure that their money is well placed and that they can trust you to do a good job. Once they’ve made that decision, they just review the documents, notices, or updates that you send them and are very easy to work with after that.

Also, they can be a great resource to find other family offices. They can also be a great resource if you hit a roadblock or have a little problem that you need additional help with. As I said, these are led by very, very smart people. So the additional help is oftentimes a phone call away if you really need it.

Let’s go through the 10 tips that I would recommend in working with family offices:

  1. Trustworthiness and integrity: If they don’t trust you, you’re out the door. And everyone they’ve talked to is going to hear about how dishonest you are. The most important thing is that you are just transparent, an open book. If you’re taking a big fee, disclose the fee. There’s no reason to hide it or to try and stuff it. If your performance wasn’t what you thought it was going to be in the last investment, still tell them why, what happened, explain why it went on, what you learned from it, and what sort of things you’re doing to mitigate that chance in the future. Just be open and transparent. That’ll go a very long way to building that trust and getting them to invest with you.

  2. Having a long-term vision: For me, this fits in with the founder investment theory. Because if you don’t have that, what are you going to talk to them about? These people see deal after deal after deal. When they choose to make an investment, they’re choosing to make an investment in you. It’s not that they’re going to be interested in that plain vanilla box, multifamily building down the street. It’s not very interesting. They want to know the story of it. Why should you do it? Don’t waste their time with a very long story. But it needs to actually be coherent, show a vision of why you are the pick for them. It’s not always about massive amounts of gains for them. It is about strategic long-term vision, where they can basically count on you time and time again to invest with. They’re entering into a long-term relationship in their minds most of the time. And they want to be able to not have to second-guess that every single time. And that comes from vision, which means your founder’s investment theory needs to be tight.

  3. Alignment of values: If you are going to be doing a chain of vape stores, which is totally fine and doable to do, you may have investors who are just not interested in vape stores whatsoever. They are opposed to it, their great-grandfather died of lung cancer, something like that. Whatever it is, it’s got to align properly with who they are and what they represent. Most family offices have a very clear picture of what their ideal investments look like or feel like to them, and it needs to match up to that. If it’s not a match, that’s fine. It’s just not a match and they’re not going to change their values in order to invest with you. But make your values clear so that they can understand very quickly without having to read between the lines what you stand for.

  4. Direct communication: They need to be able to pick up the phone and talk to you immediately. They need to be able to have candid conversations quickly. They don’t want to waste their time going through loopholes in order to get you on the phone or to be able to understand XYZ.

  5. Clear exit strategy: You can’t just say, “Well, we’re going to hold it for a while, and then we’re going to leave.” They are long-term planners. Planning is the key word there. They need to understand their portfolio and how their portfolio is going to evolve over time. They need to know well, if this sort of event happens, these are the consequences to what’s going to happen for the benefit of the family or families that are part of that family office.

  6. Diversification: The reason that they’re talking to you at all is because they need to diversify their funds. They cannot put all of their funds with one money manager, or one syndicate, or one private equity fund. That would be a disaster for them. If one of them goes out, they’ve lost everything. Diversification is key for them. They make very large portfolio plans, and they need to understand how you fit into there. So help them out and make it clear how your project, your fund, or whatever you’re offering can fit into a diversity of their portfolio as a whole.

  7. Educate, don’t just pitch: Don’t hard sell them. They need to understand what you’re doing. These people see deal after deal after deal. It doesn’t matter if you can sell snow to an Eskimo because they are going to make the decision purely based on what we’ve just talked about. All these things are what are going to be part of their decision-making process, not some fancy sales tricks. They’ve seen it before. And they will not tolerate any sort of shenanigans going on with that.

  8. Showcase your track record: No matter what, you have a track record. So even if it’s a track record that’s very short, showcase why you’re good. Showcase why you’re doing this, make it clear why you can deliver results.

  9. Personalize it: At the end of the day, you’ve got another person across the table from you. They need to understand who you are. That builds the trust, that transparency, that integrity, that vision. They need to be able to see all that. Personalize it and it will pay dividends.

  10. Always look for co-investment opportunities with them: They don’t want to be the only one investing in your project. They would love to see you co-investing in it as well. Skin in the game is important for family offices. They want to make sure that you’ve got a lot to lose if this thing goes south because they feel like they should when they have to talk to the heads of families that are investing with them. So make sure that you have those opportunities. If it’s not there, that’s okay, still have those conversations, but set your expectations a little bit lower. Because maybe they have very high requirements. It’s possible that they don’t; they may just like you enough that they’ll do it anyway. But make sure that if you do have that, hey, we’re going to be putting 20% of our own money into it. Oh, that’s a big deal. That suddenly tells the family office, “Okay, these people are just as invested as they’re asking us to be.”

I hope these 10 tips have helped. Please let me know if we can help you put together your next Regulation D rule 506b or 506c syndication or fund. We will help you.