European family offices have been much slower to invest in start-ups compared with their colleagues in the US. Although there are no figures to back this up, anecdotal evidence is pretty conclusive. But this might be beginning to change.
Big family office investors in startups in the US include the Pritzker Group, Tao Capital Partners, MSD Capital, ICONIQ Capital, and Vulcan Capital. Between them, these family offices have invested in hundreds of startups. But, on the whole, European family offices haven’t invested in anything like the numbers and money in startups as their US colleagues have.
Of course, cultural factors plays a big role in the difference. The US venture capital and startup culture are much more highly developed than in Europe, and many more family offices are connected to the tech sector in the US than in Europe. Also, the chances of backing a “unicorn” - a billion dollar startup - is much greater in the US than in Europe.
But there is some evidence this is beginning to change as European family offices see greater potential in the startup sector. European family offices investing in startups have included Smedvig Capital, which successfully backed Streetcar, a car sharing club launched in the UK in 2004; Aeris Capital, which has backed Jiff, a US-based health benefits platform founded in 2010; and Armada Investments Group, which has backed bexio, a Swiss-based startup founded in 2013 linked to accounting software.
And Swedish-based family investment group Kinnevik, which is owned by the Stenbeck family, backed a startup a few years ago called Rocket Internet, which is also behind an online retail group called Zalando. Zalando has also been backed by other family investment groups.
Peter Brock, EY's head of family office services, says EY is holding events with startups and family offices in Germany, which have gained popularity in recent years. “We are attracting around 25 to 30 family offices to these events, and families are showing a greater willingness to invest,” he says. “In Germany, there’s definitely more of an appetite to back startups from family groups compared with a few years ago.”
Family-backed venture capital/private equity groups are often the way some of these investments take place, says Brock. One such group is the Munich-based Acton Capital Partners, a big backer of digital-based startups. Acton is linked to the Burda family, the owners of the big German media group, Hubert Burda Media.