Delivering High-Level Insight for Family Office Investing in the PE & VC Space

October 28, 2020 | Harvard Club, New York

Delivering high-level insight for family office investing in the PE & VC space

Read about trending topics being discussed during Family Office Connect Spring, the go-to for single/multi-family office insight and unsurpassed networking opportunities in North America.

Dear Colleague:

Over the past ten years, family offices have been one of the fastest growing segments of the wealth management industry, and this trend is expected to continue. Recent reports estimate family offices hold global assets in excess of $5 trillion, allowing them to become a disruptive force in the marketplace with the capabilities of transactions traditionally reserved for their institutional counterparts.

The publishers of Buyouts, PE Hub, PERE, Private Equity International and Venture Capital Journal cover the family office sector extensively and we have compiled a white paper of exclusive articles highlighting this industry over the past few months.

Please enjoy this complimentary compilation of family office insight. To hear even deeper-dive discussions from top industry experts, join 300+ qualified Family Offices, LPs, Independent Sponsors, VCs and GPs from all over the country on May 13 at our 3rd annual Family Office Connect.

Our carefully curated event will include peer-to-peer interactive breakouts, a cocktail reception and ExecConnect private meetings.

Articles within this white paper include:

3 Apeiron, a family office with a taste for venture 5 How family offices are thinking about real estate 8 Single family offices control $5.9 trn: Campden Wealth 9 Venture fits just right in a family office portfolio 10 Why fundraising platforms have embraced impact investing

Please enjoy this white paper. I’m looking forward to connecting with you at Family Office Connect.

Kind Regards,

Melissa Baer Conference Producer [email protected] +1 212 796 8326 partnerconnectevents.com/FOC2020 Family Office Connect Fall 2020 | Venture Capital Journal | 3 Apeiron, a family office with a taste for venture By Justin Mitchell

hristian Angermayer, despite having a $400 million family Coffice, still considers himself an entrepreneur at heart.

He started his first company, Ribopharma, while still in college, but quickly dropped out to build it up. Ribopharma merged with Alnylam Pharmaceuticals in 2003. Soon after, Angermayer sold his shares and Angermayer: I am now on the other side and define myself as an investor, but I feel in my heart like an entrepreneur became a wealthy man. Apeiron has a “concentrated portfo- Presight to be completely in-house, “Technically, I am now on lio,” Angermayer said, with stakes in but that quickly changed once he the other side and define 10 companies representing about 70 began sharing his plans with friends, myself as an investor,” he percent of the firm’s NAV, which he who immediately expressed interest. said was about $400 million. Apeiron told Buyouts, an affiliate has about 12 people on staff, and Presight has a diverse list of investors. publication of Venture takes a very hands-on approach to Family offices include that of Austrian Capital Journal. “But I investments mostly in Germany and entrepreneur and Deutsche Bank feel in my heart like an Europe. But he wants to branch out. supervisory board member Alexander Recently, Angermayer closed the first Schuetz; international entrepreneur entrepreneur.” fund of Presight Capital, a “pocket” of and investor Nicole Junkermann; and Through Apeiron Investment Group, his family office focused on venture the Schadeberg Family Office, best Angermayer takes an active approach, investments. Presight was co-founded known for owning the company that finding novel ways to get directly with Fabian Hansen, who is based in manufactures Krombacher beer. involved in venture investing. San Francisco. On the Wall Street side, investors “I think I have certain character traits The fund closed at $80 million, include Mike Novogratz, formerly that are very good for an entrepre- well past its original $50 million CIO of Fortress and the founder of neur…but I also realize that I’m not target, which includes $20 million crypto merchant bank Galaxy Digital; a guy who likes to run business as a of Angermayer’s own money. The Jim Leitner of Falcon Management; CEO and be the operator,” he said. fund has no management fees, just a and Moore Strategic Ventures. Fellow “I’m more like the startup guy who 20-percent carry. entrepreneurs Michael Auerbach and likes to start things and get compa- Markus Pertl and Hollywood actress nies on the right track.” Angermayer originally intended Uma Thurman have also signed on. 4 | Venture capital journal | Family Office Connect Fall 2020 partnerconnectevents.com/FOC2020

Courtesy of Getty Images

“If we perform strategy is to follow the best funds successfully, which is my we believe produce the best returns assumption, then we want in their geography, and whatever to have the option to build they do will define our portfolio,” Angermayer said. a stand-alone, large VC manager, and to make But Presight is not all Angermayer more and bigger funds,” is up to in the venture capital space. Angermayer said. “It’s set Apeiron has also dedicated up to $30 million to a fund-of-funds portfo- up so that practically down lio dedicated to emerging managers, the road…it can morph mainly in the U.S. and Asia but also into a more individual some in Latin America. Investments standalone asset manager.” so far include Fifty Years Fund, Clocktower Technology Ventures and Akaris Global. So far, Presight’s investments have been mostly in the healthcare field, “I like it when somebody’s fitting Angermayer’s background. starting something,” They include Terran Biosciences, Angermayer said. “Just Aperion, Headquarters Sliema, Central Peptilogics, Enclear Therapies and like we want to back great SmithRX. Presight has also invested Action Item: read more in a cannabis company called Left companies, we want to back about Apeiron at Coast Ventures. great managers.” www.apeiron-investments.com. “We have no defined focus. Our partnerconnectevents.com/FOC2020 Family Office Connect Fall 2020 | PERE | 5 How family offices are thinking about real estate Given a family office’s access to long-dated capital, real estate investments seem like a good fit. But management fees continue to be an area of contention. By Lisa Fu

Courtesy of Getty images

eal estate continues to be an est study on family office real estate ents showed an interest in non-traded attractive asset class for family investments ever conducted. REITs for 2019. Direct real estate Roffices, but commingled real deals were the second most favored estate funds remain a hard sell unless None of the survey participants investment model, with 29.55 percent managers can offer lower fees and selected crowdfunding as an invest- of respondents showing an interest. build trust, according to a survey ment vehicle that they would consider Direct real estate deals, in which a conducted by Family Office Real in 2019. Van Keuren attributes this family office might partner with a Estate Magazine. lack of interest to its absence of rela- local operator, continue to be popular

Many family offices planned to add to their real estate portfolios, with 43.68 percent of respondents expecting to increase allocations in 2019, according to the survey. By comparison, just 10.34 percent intend to decrease allocations and 45.98 percent aim to stay the same, due largely to cycle uncertainty.

Like many institutional investors, family offices have found favora- ble returns in the asset class – they reported a 14 percent average return in 2018 and expect the same in 2019. However, these investors place a heavy emphasis on personal rela- tionships, as the crowdfunding model because of how fee-sensitive family tionships and low fees, explained DJ often relies on a large base of anony- offices are, according to Van Keuren. Van Keuren, a family office executive mous or new investors. By contrast, On the other hand, only 11.36 percent and founder of Family Office Real 16.82 percent expected to co-invest of family offices planned on investing Estate Magazine. He interviewed with another family office – the third in private equity real estate funds in more than 100 family offices for the most preferred investment method. 2019. Funds of funds are automati- survey, which he claimed is the larg- Meanwhile, 45 percent of respond- cally written off due to double fees, 6 | PERE | Family Office Connect Fall 2020 partnerconnectevents.com/FOC2020

Van Keuren added. He believes fund management fee contention has PROPERTIES FAMILY OFFICES ARE INTERESTED IN been a primary driver in the popu- FOR 2019 larity of direct real estate over the last Respondents, who could choose more than one property few years. The pain of management type, felt multifamily was most attractive fees is acute, with 64.71 percent of family offices saying they were “very Multifamily concerned” and 20.59 percent “some-

what concerned” about fund-level Industrial management fees. Only 11.76 percent of respondents stated that fees were Hotels negligible for attractive returns. Ofﬁce In a market expansion, family offices might profit from direct deals. Retail However, once the market turns and Single-tenant property direct deals sour, Van Keuren expects

many investors will decide that the Medical ofﬁce expertise that comes with commingled funds will be worth the manage- Assisted living ment fees. Senior apartments Managers seeking commitments from family offices may find more Single-family homes success by emphasizing their high Mobile home parks level of due diligence and putting

Self storage

Other

0 10% 20% 30% 40% 50% 60% 70% 80%

Source: Family Ofﬁce Real state Magazine survey

effort into building long-term rela- tionships, according to Van Keuren. Some firms win over family offices by agreeing to show families direct real estate deals in exchange for a fund commitment.

Many families want to see deal- flow, but do not have the resources in-house that can match the sophisti- cation of a manager. On the relation- ship front, Van Keuren recommends managers present a clear and simple

Courtesy of Getty Images investment story. DJ Van Keuren Forbes Real Estate Council Member partnerconnectevents.com/FOC2020 Family Office Connect Fall 2020 | PERE | 7

Multifamily residential was the FAMILY FOUNDATION INVESTMENT ALLOCATIONS most attractive property type for 2019 Direct real estate takes the top spot, but family foundations are more open to funds than family oces With 77.7 percent of families indicating interest, likely because the Real estate funds investment strategy is one that is easy to understand, Van Keuren Real estate mutual funds explained. Industrial properties and hotels followed, with 38.8 percent REITs and 27.7 percent showing interest, respectively. In that regard, “family Real estate opportunity offices are more like retail investors zone fund than institutional investors,” he told PERE. Direct real estate He also observed how the outcome of Co-investments family investments was often consid- ered personal, with 76.4 percent of 0 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 55% respondents saying they want to use Source: Family fﬁce Real Estate agazine survey real estate to create generational wealth.

However, a family’s foundation often approaches real estate investments in FEE SENSITIVE IN SPITE OF GOOD RETURNS a different manner than the family How concerned are family o ces about fund-level office, according to Van Keuren. The management fees? former may want to commit to a real estate fund, even if the family office does not, because it is usually run by a different person and has a different purpose.

Most foundations focus more on maintaining funding and taking a more passive investment approach. Indeed, 31.25 percent of family foundations showed an interest in funds, compared with the 11.36 percent of family offices. But even with foundations, direct real estate continued to be the most sought after strategy, with 52.94 percent of respondents indicating interest.

Action Item: read more about DJ Van Keuren at www.realcapitalsolutions.com. 8 | BUYOUTS | Family Office Connect Fall 2020 partnerconnectevents.com/FOC2020 Single family offices control $5.9 trn: Campden Wealth By Justin Mitchell

• Why this is important: the amount of wealth controlled by family offices is growing.

K-based Campden Wealth estimates that there are about U7,300 single family offices worldwide which hold $5.9 trillion in assets under management.

“This number has jumped a significant 38 percent in UK-based Campden Headquaters the last two years, with the greatest rise over this period just over a third of family offices now family offices since the millennium, coming from the Emerging have more than one branch, with a and particularly since 2010. In fact, Markets (up 50 percent), small portion having as many as five. just over two-thirds of family offices followed by Asia-Pacific (+44 were established in 2000 or later,” she “Globalization is impacting wrote. percent), North America the family office landscape,” (+41 percent), and Europe Gooch wrote These numbers, first reported by (+28 percent),” Rebecca Reuters, will be included in the next Gooch, Campden’s director Global Family Office Report, which Campden estimates the wealth Campden Wealth works on each year of research, behind these single family with UBS. told Buyouts in an email. offices at $9.4 trillion.

Of the 7,300 single family offices, Gooch confirmed these numbers Campden estimates 42 percent are cover only single-family offices, and in North America, 32 percent are in that the amounts would be higher Europe and 18 percent in the Asia- were multi-family offices included. Pacific, with 8 percent split between She expects this trend to continue. the emerging markets of South “I believe that this trend will continue America, Africa and the Middle into the 2020s and beyond. We have East. Gooch also told Buyouts that seen a rapid increase in the number of

Photo courtesy of Getty Images partnerconnectevents.com/FOC2020 Family Office Connect Fall 2020 | Venture Capital Journal | 9

Venture fits just right in a family office portfolio Cambridge Associates recommends family offices to have a venture allocation of 15% to 20% and believes venture offers family offices a way to make money to pass down for years to come.

By Rebecca Szkutak

nvesting in venture can help family proper diversification and successful offices make a lasting impact on partnerships. Itheir balance sheet and society. “How you construct a A recent report from Cambridge well-diversified portfolio Associates highlights that there is a and how you select potential suite of long-lasting bene- fits for family offices and institutions managers is critical to that invest 15 percent to 20 percent of success,” Ma said.

their portfolio into venture. Ma said that these managers no Ma: “Venture is one of those rare parts of the market longer have to be the top-tier names where you can bet pure play exposure to innovation with a new set of that can take our society and The risk profile typically associated in the industry, either. He said their economy.” with venture has softened over the clients have found success across the last 20 years as the market no longer market and have worked with smaller In addition to returns, Ma said that is divided by strict winners and losers, shops and emerging managers. family offices that are looking to put the report stated. The capital loss their money toward making a differ- ratio dropped from 50 percent to 20 Ma said that they typically recom- ence in the world or a positive impact percent over that time. mend working with managers that on society have plenty of opportuni- generate the majority of their revenue ties in the venture market. Liqian Ma, a managing director and through carried interest, as opposed head of impact investing research to management fees, and who differ- The report concludes that with many at Cambridge Associates, said that entiate themselves by focusing on a VC funds targeting returns of up to while many investors still associate specific sector or stage of investing. 300 percent, venture offers family venture with its former heightened offices a way to make money to pass risk profile, the asset class can be a Ma said that they typically avoid the down for years to come. strong option for family offices with later-stage market because of the high valuations and the froth that “Venture is one of those rare parts of currently resides there. the market where you can get pure play exposure to innovation with a The sectors that are particularly new set of opportunities that can attractive right now include manu- impact our society and economy,” facturing, AI, construction and soft- Ma said. ware, he said. He added that while his US clients have a strong exposure to Action item: Read more on the US and China VC markets, they Cambridge Associates see successwith the managers in at cambridgeassociates.com

2019 Family Office Conference in NYC emerging markets, as well. 10 | Private Equity International | Family Office Connect Fall 2020 partnerconnectevents.com/FOC2020 Why fundraising platforms have embraced impact investing

Significant exposure to family office capital has prompted fundraising platforms to seek out impact opportunities. By Alex Lynn

Photo courtesy of Getty Images nline fundraising plat- from a UNDP incubator. forms and impact investing That multiple fundraising platforms Ostrategies have both been Xen’s not the first of its kind to have so willingly embraced impact earmarked as future disruptors of embrace impact. PrivateMarket.io, is no coincidence; demand has been the private equity industry. It’s there- a Switzerland-headquartered plat- driven by significant exposure to fore fitting that a growing number of form, launched an impact strategy family office capital. organisations are combining the two. in mid-2019, chief executive Loic Engelhard told PEI. Such institutions accounted for Last month, Private Equity around 80 percent of the $100 million International reported that Xen, a committed on Xen’s platform as of Singaporean fundraising startup, is Xen has already raised around January and 90 percent of the $250 in talks with the UN Development $20 million for two impact million transacted via PrivateMarket. Programme to create an impact funds. io. iCapital has raised capital from investing platform. more than 300 family offices. iCapital Network, a New York- The partnership, slated for Q2 2020, headquartered platform that services would involve Xen raising capital more than $46 billion of invested capi- “We used to be heavily focused on for direct investments in emerging tal, is also understood to be raising Asia markets but Swiss family offices markets startups that have graduated capital for impact funds. are very conservative and didn’t have partnerconnectevents.com/FOC2020 Family Office Connect Fall 2020 | Private Equity International | 11

high-net-worth agenda in recent years FAMILY MATTERS as a younger generation of executives take charge. The average family ofﬁce is expected to have a 25% allocation to impact investing in ﬁve years' time Millennial investors have grown up 40 with environmental challenges taking centre stage in media, UBS noted in 35 its 2017 report.

30 Impact firms are also tapping this trend.

) 25 % (

s t London-headquartered Bridges Fund n

e 20 d Management, which has £926 million n o

p ($1.2 billion; €1.09 billion) of assets s

e 15

R under management across multiple funds, appointed a family office 10 specialist to its advisory team in late 2018 in response to rising HNW 5 appetites for impact.

0 1-9% 10-24% 25-49% 50-74% 75-100%

Source: BS

much experience of private equity,” Real estate investments, such as green he added, noting that Asian private or affordable housing, was the next equity funds now account for less than most popular at 32 percent. 50 percent of its offerings, having added impact and Swiss real estate 60 percent of Family Offices opportunities. said impact had matched expectations “Real estate and impact Sustainable and impact investments Elizabeth Burgess strategies are more Partner, Head of Growth Business tangible.” have climbed the family office and Elizabeth Burgess is a Partner and A quarter of family offices are Sustainable & Impact Investments Head of the Growth Business invest- currently engaged in impact investment strategy, where she leads on ing, according to the UBS Global fund strategy, origination, investment Family Office Report 2019. More than and portfolio management. a third (37 percent) of family offices 40 expect to increase their impact allo- Elizabeth has approximately 30 years

cation to 10 to 24 percent of their total Family Ofﬁces of experience in private equity and

portfolios within five years and 30 60% leveraged transactions across a wide percent plan to allocate 25 percent or range of industries and markets. more. Tellingly, 76 percent of family office impact investments have been Action item: Read more on via direct private equity, similar to Bridges Fund Management at

Xen’s proposed approach. Matched Expectations Not et atched bridgesfundmanagement.com

Source: aul, eiss, ikind, harton arrison 12 | BUYOUTSINSIDER Family Office Connect Spring 2020 9 bit.ly/focs2020

October 28, 2020 | Harvard Club, New York

Delivering high-level insight for family offi ce investing in the PE & VC space

Agenda produced by Buyouts, 4 new breakout sessions Exclusive peer-to-peer PE Hub, Private Equity including PE Trends, Inside the networking through our International & Venture FO, Leveraging Emerging Tech & proprietary ExecConnect 1-1 Capital Journal Deal Flow Dynamics Meetings Program

Featured speakers announced:

Clark Cheng Timothy D. O’Hara Mitzi Perdue Mark Sotir Chief Executive Offi cer & Chief President, Family Offi ce Author, Speaker, Businesswoman, President Investment Offi ce Rockefeller Capital Past President of American Equity Group Investments Merrimac Corporation Management Agri-Women (SFO) (SFO) (MFO) Founder of CERES Farm

Learn more at partnerconnectevents.com/FOC2020