The Founder's Guide to Private Investment Offices
Learn how founders turn post-exit wealth into a lean, tech-enabled private investment office—covering structure, strategy and pitfalls for sub-$300 M portfolios.
Ever wonder what happens to your wealth after you sell a company?
When you exit, the game isn't over – it just changes. Now you're suddenly managing significant capital, and traditional wealth management often falls short. Cookie-cutter solutions from banks don't match your ambitions. DIY investing lacks structure. And big family offices typically require billions to justify their overhead.
That's where private investment offices come in – and they're more accessible than ever before.
What Is a Private Investment Office?
Think of it as your personal investment company. A private investment office is a scaled-down version of traditional family offices, explicitly designed for modern founders and entrepreneurs.
The good news? Thanks to new technology and specialized service providers, you can create a lean, effective setup with as "little" as $30-50 million in assets. This is the sweet spot for founders who've had a meaningful exit but aren't quite in the billionaire category (yet).
Why bother when you could just hand your money to a bank?
Control and customisation: You set the strategy aligned with your goals and values
Comprehensive approach: Integrating investments with tax, estate, and philanthropic planning
Better deal access: Ability to source and participate in opportunities beyond retail options
Maintain active involvement: Keep applying your entrepreneurial skills to wealth-building
Flexibility: No bureaucratic mandates or pre-packaged solutions
Most importantly, it puts you in the driver's seat. As one founder said, "I didn't work this hard building a company just to hand the proceeds over to someone who doesn't care nearly as much as I do."
Structure: Run Your Wealth Like a Business
Your first step is creating the proper legal framework:
Entity structure: Typically an LLC (US) or Family Investment Company (UK)
Governance: Clear decision-making processes and investment policy
Team approach: Most start with no full-time staff, leveraging external advisors
The "virtual family office" concept means building a network of best-in-class experts coordinated by you or a central advisor. This might include:
A private banker or broker for executing trades
An attorney for legal work
An accountant for taxes
Specialised consultants for due diligence on specific opportunities
As your assets grow, you might add dedicated staff – perhaps a controller to handle accounting and reporting, or an investment analyst to help evaluate deals.
The key is maintaining the entrepreneurial mindset. Run your wealth with the same focus and strategic thinking you applied to building your business. Document your mission and investment philosophy as you would create a business plan.
Investment Strategy: Beyond Stocks and Bonds
The beauty of your own investment office is the freedom to pursue a broader range of opportunities:
Core Portfolio
Most maintain a liquid foundation of public equities and fixed income (40-60% of assets) for stability and ready capital. This serves as the "liquid core" – something that can be drawn on for cash needs or rebalanced to seize other opportunities.
Because entrepreneurs often have higher risk tolerance, family offices may be more equity-heavy than traditional wealth managers would recommend. For instance, if growth is a priority, you might target 60-70% in equities, accepting higher volatility for better long-term returns.
Alternatives
This is where it gets interesting:
Private Equity: Investing in established private companies, either directly or through funds
Venture Capital: Angel investing in startups (particularly popular among tech founders)
Real Estate: Income-generating properties, development projects, or speciality REITs
Impact Investments: Ventures with social/environmental benefits alongside returns
Digital Assets: Careful allocation to cryptocurrencies and blockchain opportunities
Family offices globally now allocate about 40% of their portfolios to alternatives. The attraction is clear: alternatives have been a major source of returns in a low-yield world.
Many first-gen family offices lean heavily into investments that leverage their domain expertise. For example, gaming entrepreneurs often back gaming startups, where they have an edge in evaluating teams and products.
One key lesson from successful family offices: at first, "every VC ticket sounds great" when surrounded by pitches, but becoming strategic and selective is critical. Develop criteria to filter deals and look at your deal flow as a portfolio, not just one shiny startup at a time.
Portfolio Construction Best Practices
An effective family office portfolio blends these elements strategically:
Liquidity management: Stagger commitments to illiquid funds so you're not caught without cash
Vintage diversification: Invest across different years and market cycles
Concentration limits: Set maximum allocations to any single investment
Co-investment approach: Partner with other families or funds on larger deals
Periodic rebalancing: Maintain discipline by returning to target allocations
Smart families set aside a "rainy-day fund" or cash buffer to cover 1-2 years of expenses or commitments. Nothing worse than having to fire-sell an investment because you forgot a capital call is due.
Operational Infrastructure
A modern office runs on these key systems:
1. Reporting & Aggregation
You might not know your true exposure or performance across dozens of accounts without proper aggregation. Consider specialised family office reporting software like Asora, Addepar, or Black Diamond that can:
Pull data automatically from financial institutions
Allow manual input of private holdings
Generate performance reports and asset allocation breakdowns
Provide custom metrics and dashboards
The goal is to replace clunky Excel workbooks with a modern dashboard of your entire net worth.
2. Accounting & Bookkeeping
Your office needs general ledger accounting – tracking income, expenses, and balance sheets. Essential tasks include:
Reconciling accounts
Tracking capital calls and distributions
Recording valuation changes
Preparing financial statements
Many family offices close their books monthly or quarterly. It's wise to have an independent accountant review periodically.
3. Security & Risk Management
Implement strong security protocols:
Using dedicated devices for banking
Employing encrypted communication for sensitive information
Conducting periodic security audits
Educating family members on phishing risks
Wealthy individuals are high-value targets for cybercrime. Simple practices like verifying transfer requests through a second method can prevent fraud.
Tax and Legal Considerations
A liquidity event often triggers significant tax planning needs. Your family office structure should optimise taxes legally through:
Entity selection: Different structures have different tax treatments
Location strategies: Some jurisdictions offer favourable tax treatment
Ongoing tax management: Tax-loss harvesting, charitable deductions, etc.
Be careful about regulatory compliance – a pure single-family office is typically less regulated than other financial entities, as long as you truly only manage your own family's money. In the US, for example, the Dodd-Frank Act exempts single-family offices from registering as investment advisers under specific criteria.
Common Pitfalls to Avoid
Learn from others' mistakes:
Starting too big: Building elaborate infrastructure before you have sufficient scale
Poor hiring: Bringing in advisors with misaligned incentives
Overconcentration: Putting too much into one asset class or deal
Chasing fads: Jumping from trend to trend without strategic coherence
Neglecting operations: Exciting investments get attention while accounting/compliance slides
Impatience: Wealth building is a marathon, not a sprint
One particularly dangerous trap is overextending your personal bandwidth. If you try to do everything yourself—manage every investment, track every expense, handle all paperwork—you'll burn out or let things slip through the cracks.
Identify areas where your input is most valuable (perhaps high-level allocation and deal selection), and delegate or outsource the rest. This will allow you to focus on big decisions and enjoy life after your exit.
Real-World Example
BLN Capital was founded by three young entrepreneurs who sold Kolibri Games for €120 million in 2020. They hired Jan Voss as a dedicated manager to run their office and assembled a small team of investors and assistants.
Their strategy mixes public markets with venture capital, focusing especially on mobile gaming (their expertise area). They invest in numerous top-tier VC funds for broad exposure and also make direct angel investments.
A challenge they faced was that, being new, they needed to build relationships to access the best deals. Unlike old-money families with established networks, they had to "fight to get in" to premier funds.
Their key lesson? Be extremely selective with deployments – with limited deals per year, each one counts substantially. They also found that while startup investing is exciting, it becomes time-consuming as the portfolio grows, requiring a clear strategy and the discipline to say "no" often.
Another example is Addition Capital, the London-based family office of entrepreneurs Jay and Rumi Verjee. Established in 2018, it focuses on investments in small—to mid-size companies across sectors like financial services, technology, and healthcare. But it's not limited to the UK. Significant investments include San Francisco and Silicon Valley startups, demonstrating the global reach a family office can have.
Getting Started
If you're considering setting up a private investment office, begin with these steps:
Clarify your goals: What are you trying to achieve with your wealth? Preservation? Growth? Impact?
Assemble key advisors: Find a good lawyer, accountant, and perhaps investment consultant
Start lean: Build a minimal viable infrastructure and expand as needed
Document your strategy: Create an investment policy statement
Set up reporting: Implement systems to track everything from day one
Create governance: Establish decision-making processes, even if it's just you
Remember that patience and continuous learning are essential. The markets will have ups and downs, and you'll likely adjust course many times. A family office is a long game.
Think of it as evolving from being a "rich individual with a brokerage account" to becoming the CEO of your capital. It requires professionalism and discipline, but that's the same mindset that built your business success in the first place.