Key facts
- Family offices are increasingly prioritizing AI investments over traditional long-term assets.
- They are shifting from blind-pool fund commitments to direct deals or buying existing shares in private companies.
- Family offices oversaw $5.5 trillion in wealth in 2024, projected to reach $9.5 trillion by 2030.
- Alternative investments, including private equity and venture capital, constitute 42% of average family office portfolios.
- Direct investment activity in family offices peaked in 2021 but fell significantly by late 2023.
- 65% of global family offices plan to prioritize AI investments despite valuation concerns.
Family offices are increasingly directing their substantial capital towards artificial intelligence investments, seeking faster returns and bypassing traditional venture capital structures. This trend is driven by the perceived rapid growth and monetization potential of AI technologies.
According to Djoann Fal, a family office advisor at Atlas Capital, the current investment environment favors deals with quicker returns. He noted that if presented with two opportunities, one tripling money in three years and another in three months, investors would opt for the latter, which is often an AI-related deal.
This shift also involves a change in investment strategy. Instead of committing capital to venture capital funds for extended periods, family offices are increasingly engaging in direct investments, either by purchasing existing shares in private companies or by striking direct deals. This approach allows them to gain exposure to high-growth AI companies without relinquishing control over their capital for a decade.
Fal highlighted that family offices possess significant financial resources, overseeing $5.5 trillion in wealth in 2024, with projections to reach at least $9.5 trillion by 2030. A UBS report indicated that alternative investments, including private equity and venture capital, now account for 42% of average family office portfolios, suggesting a growing appetite for riskier, potentially more lucrative assets.
While direct investment activity has seen cycles, peaking in 2021 and declining sharply by late 2023 due to rising interest rates and disappointing returns, it is now rebounding. Family offices are reportedly writing larger checks for fewer deals, with a significant portion of this activity occurring in the secondary market. Angelina Hu of Bridge Funding Global described the secondary market as a way for family offices to gain exposure to private companies without diversifying across numerous investments.
Bruce K. Lee, founder of Keebeck Wealth Management, observed that family offices recognize the risks but are eager not to miss out on AI opportunities. This sentiment is reflected in Fal's business, where capital is being raised specifically for "AI things," with clients struggling to secure funding for non-AI ventures. Family offices are willing to pay "primary-style prices" for "secondary-stage risk," even if it limits the potential for outsized returns.
Examples of sought-after investments include stakes in Anthropic and OpenAI, which Emily Zheng, a senior VC analyst at PitchBook, described as highly contested assets. Even advisors with mandates outside of AI are being drawn into these transactions due to strong limited partner demand.
Despite concerns over inflated valuations, a J.P. Morgan Private Bank report found that 65% of global family offices plan to prioritize AI investments. Maximilian Kunkel, chief investment officer at UBS Global Wealth Management, noted that family offices are navigating geopolitical tensions, rising debt, recession risks, and market uncertainty, viewing AI as a powerful long-term growth opportunity. They are balancing AI exposure with diversification across regions, currencies, and asset classes to manage risks.