San Francisco Family Office
💸 UHNW Single Family Office (SFO) in the San Francisco Bay Area will start investing in VC again in 2024, after expected distributions.
The insights below come from a conversation with the 3rd Generation (G3) Principal of an Ultra-High-Net-Worth (UHNW) Single Family Office (SFO), based in the San Francisco Bay Area, who made their wealth in manufacturing & education services.
🧠 Investment Philosophy
Invest in opportunities that have an outsized positive impact on the world, e.g., climate change, healthcare, etc., and attractive returns.
Strong supporters of the venture ecosystem, having made generational wealth from entrepreneurial endeavors.
Prioritize trust as a key investment criteria (will walk away if something does not seem right).
Zero “FOMO” (fear of missing out) in investment decisions.
📊 Portfolio Construction
40% liquid (cash & fixed income)
20% real estate
20% private equity
20% venture capital
Closely held private companies
🚀 Venture Portfolio
2-5 fund of funds (including emerging manager FoF)
15-20 fund investments
20-30 direct investments: Seed to Series B first-check ($1M avg.)
🔮 Looking Forward
Expect to deploy in 2024: Expecting distributions from previous investments in 1H 2024, and expect to begin deploying into venture again in 2024.
High bar for direct investments: Conduct complete due diligence before investing (no FOMO).
Exploring secondaries: Open to investments in late stage / pre-IPO companies. Interested in Healthcare / Life Science & Frontier Technology deals. Primarily US.
Private Equity: Expanding distressed debt.
Venture Capital: Currently right-sized in venture, else would be deploying to VC in current lower valuation + higher discipline investment environment.
✍🏼 LP Lessons Learned
Diversity in GPs & founders improves returns: 70% of investments are in diverse & minority-led companies. Returns of the portfolio are comparable to top fund managers.
DPI is the new TVPI: Fund distribution (DPI) track record is a key criteria for assessing fund investments vs. TVPI (Total Value to Paid-In capital).
Find fund’s competitive edge: Fund managers need to clearly articulate & demonstrate their competitive advantage.
Assess strength of GPs’ relationship: In funds with more than 1 GP, understand the GPs commitment to each other and how they resolve conflict.
OK to pass on vintages: Ok to reduce or not re-invest in future vintages if fund is not performing.
🙏 Special thanks to the Principal of this SFO for sharing their insights (shared with their permission, on the condition of anonymity).
🎷 Connect with Family Offices
Family Offices & LPs: Join a curated group of LPs at Hyphah’s LP Salons.
Secondaries / Co-Investments: Please e-mail connect@hyphah.com with relevant opportunities in Life Sciences / Frontier Tech to share with this SFO (double opt-in).
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