E80: How ~$16 Billion Multi-Family Office WE Invests
Jul 26, 2024
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Matt Farrell, Senior Investment Manager at WE Family Offices, discusses investing strategies for families with $50M-$1B+, including balancing risk tolerance and liquidity needs, finding alpha in the market, and selecting private fund managers. Topics also include the diligence process for managers, co-investing, and value-add in venture capital.
WE Family Offices prioritizes transparency and education in venture capital for affluent families.
Customized investment strategies at WE Family Offices balance risk tolerance, liquidity needs, and thematic tailwinds.
WE Family Offices favors early-stage managers, focusing on thematic strategies and proactive risk mitigation.
Due diligence at WE Family Offices emphasizes thorough reference checks and clear portfolio strategies for resilience.
Deep dives
WeFamilyOffice's Wealth Management Approach
WeFamilyOffice provides comprehensive wealth management services, positioning themselves as the client's 'quarterback' in overseeing their wealth enterprise. They work with affluent families, offering fee-based services without taking discretion, ensuring objectivity in advice and sourcing the best managers. WeFamilyOffice caters to families with assets ranging from $50 million to a billion, providing a unique, non-sales approach that empowers clients to make informed decisions.
Investment Philosophy and Strategy
WeFamilyOffice focuses on a customized approach to investment advisory, emphasizing a blend of active and passive investments based on liquidity needs, risk tolerance, and thematic tailwinds. They prefer passive investments in efficient markets and allocate fees to explore more complex, illiquid alternatives, leveraging the illiquidity premium. Emphasizing transparency and educating clients on venture capital, they prioritize disciplined portfolio construction to align with clients' investment goals.
Alternative Investments and Manager Selection
WeFamilyOffice favors smaller, early-stage managers who are hungry and experienced, capturing them before they scale excessively. With a focus on thematic top-down and bottoms-up strategies, they assess manager alpha in fragmented markets. Emphasizing active involvement in portfolio companies, they value proactive risk mitigation and a clear, hands-on approach to drive outcomes and align with founders' selections.
Due Diligence and Investment Verification
WeFamilyOffice's due diligence process involves thorough reference checks, prioritizing direct, off-sheet references for accurate insights into managers and their value-add capabilities. They assess economic, operational, and strategic aspects to mitigate business risks early on, ensuring clear strategies for portfolio holdings and focusing on building portfolios resilient through market cycles.
Community Engagement and Venture Capital Insights
Eric at Turpentine engages tech communities and offers insights on venture capital in an evolving market. Discussions focus on raising capital, verifying investment narratives, and fostering trust in manager narratives. With a trust but verify approach, the emphasis is on challenging conventional wisdom to refine investment strategies and enhance outcomes.
Turpentine's Tech Community Initiative
Turpentine aims to create a tech-focused media platform and a network product to connect founders and executives. Providing a high-trust space for collaboration, knowledge sharing, and network-building, Turpentine offers exclusive perks, tactical advice, and a supportive community for tech professionals to thrive and exchange insights.
Discussion on Wealth Management and Venture Capital
The podcast delves into wealth management complexities, bespoke investment strategies, and due diligence in venture capital investments. With a focus on transparency, client empowerment, and risk mitigation, the conversations provide valuable insights into prudent investment approaches and the significance of actively involving LPs in the manager selection process to drive positive outcomes.
Enhancing Client Relations and Professional Engagement
WeFamilyOffice's commitment to client-centric, fee-based wealth management underscores integrity, transparency, and client empowerment. By providing objective and customized financial services, leveraging thematic investment strategies, and prioritizing proactive due diligence, they advocate for a holistic approach to investment management that aligns with clients' goals and values, fostering enduring relationships and sustainable growth.
Matt Farrell, Senior Investment Manager at WE Family Offices, sits down with David Weisburd to discuss how families with $50M-$1B+ invest their capital. They also cover balancing risk tolerance and liquidity needs, where alpha is in the market today, and characteristics of an ideal private fund manager.
(0:00) Episode preview
(0:51) Overview of WE Family Offices
(3:05) Typical family office portfolio construction
(6:12) Behavioral finance and illiquidity as a feature
(9:36) Investment strategies for ultra high net worth families
(13:33) Manager selection attributes and importance of transparency
(16:22) Diligence process for spin-out managers
(18:24) Approach to venture capital as an asset class
(21:14) Follow & subscribe to The 10X Capital Podcast
(21:34) General guidance on co-invest
(23:37) Value-add for venture capital managers
(25:07) Hierarchy of the reference process
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