Written by Ian Sosso, Founder & Managing Partner Monte Carlo Capital
“Building direct exposure to early-stage start-ups is not only a profitable strategy but is vital for the long term perennity of principals of family offices in a world where we are seeing a redistribution of wealth towards tech businesses and tech entrepreneurs. This article is not only relevant to principals of family offices but also to any sophisticated investor who can afford the illiquid and long-term nature of the asset class: from high net-worth investors to principals of family offices, to pension funds, insurance companies, sovereign wealth funds and endowments.
To the principals of family offices, whether you still own businesses which at some stage may become threatened by new technology and business models, and therefore you need to keep on top of the technologies which affect those businesses, or your family has exited its businesses and seeks either capital preservation or accumulation, becoming a savvy early-stage tech investor provides significant upside, both direct (financial) and indirect (know-how). Principals are increasingly investing directly in early-stage businesses. I have seldom met one that is not either already investing or at least considering it, yet, finding the right investment formula has been challenging for many: loss of capital in the first few investments, lack of understanding of technology and the investment process, ticket size too small to warrant the time and effort, etc.
So how do you build a strategy that makes sense and why it is so important that you do? I initially started Monte Carlo Capital (MCC) to invest my own money in early-stage businesses. Now MCC is a group of private investors and family office principals investing directly in early-stage tech and life science companies, and I am the lead investor for every investment the group does. As a result, I get to deal with principals of family offices regularly and the observations highlighted in this article stem from my interactions with them. However, every family is different, and followed its own path to wealth. The comments in this article are meant to highlight some of the main trends I have observed over the years.”