Do Family Offices / other LPs hire BD guys to Access Top Opportunities?
We know that in any asset class there are top GPs (e.g. Sequoia for VC) that deliver outsized returns relative to anyone else. Just wondering if and how small family offices / LPs (sub $1B, sub $500MM) try to get access to those deals - I imagine paying a business development guy $300K - $500K is well worth the investment if it means getting placed with top GPs, but I haven't personally heard of arrangements / roles like this. Is this under the purview of principals / IR?
Based on the WSO Dataset, the hiring of business development professionals by family offices or other LPs to access top investment opportunities isn't explicitly mentioned. However, we can infer some related practices from the context provided:
Role of Principals and Internal Teams: Family offices often have small, versatile teams that handle multiple aspects of investment and relationship management. It's common for principals or internal investment relations (IR) teams to take on the responsibility of networking and securing access to top GPs. This is because these offices value deep, personal relationships and often rely on the extensive networks of their senior team members.
Investment in Relationships: While not directly mentioned, the strategic importance of building and maintaining relationships with top GPs suggests that family offices would consider it worthwhile to invest in personnel who can manage and enhance these relationships. Whether this is through a dedicated business development role or through the existing roles of principals and IR professionals can vary depending on the size and specific strategy of the family office.
Cost-Benefit Analysis: The idea of hiring a business development professional with a salary in the range of $300K-$500K to secure placements with top GPs is plausible. Family offices, especially those managing substantial assets, might find the potential returns from top-tier investments justify such an expenditure. However, this would likely be a strategic decision based on the office's asset size, investment strategy, and existing network capabilities.
In summary, while the direct hiring of business development professionals for accessing top GPs isn't detailed, the roles of principals and IR within family offices are crucial in managing these high-stake relationships. The investment in skilled personnel to secure top investment opportunities aligns with the strategic objectives of many family offices.
Sources: Are we in a new Family Office bubble?, Is there any part of the financial industry that is growing?, https://www.wallstreetoasis.com/forum/private-equity/family-office-versus-traditional-pe-shop?customgpt=1, Family Office Private Equity, Family office Private Equity - help
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