LONDON (IT BOLTWISE) – Single family offices in the DACH region are radically changing their investment strategies. They are shifting from conservative investments to direct corporate investments and early-stage investments. This development underlines their desire not only to manage capital, but also to actively influence their investments.
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Single Family Offices (SFOs) in the DACH region, which are traditionally viewed as discrete capital managers, have fundamentally changed their investment strategies since 2023. While they previously invested primarily in conservative investments such as real estate and fixed-interest securities, the focus is now on direct company investments. This shift is particularly evident in the increase in early-stage investments, which have now become the norm.
A central aspect of this new strategy is risk spreading through smaller, diversified investments. Instead of making large individual investments, SFOs are increasingly relying on a variety of smaller investments. This allows them to pursue their entrepreneurial passion while minimizing risk. The data from the private bank Berenberg illustrates this trend: The proportion of direct investments in total assets has changed significantly, with rates between 10 and 20 percent increasing significantly.
Another notable change is the timing of entry into companies. SFOs are increasingly investing in the early stages, long before traditional venture capital funds become active. This not only offers them the opportunity to benefit from lower valuations and smaller investment amounts, but also strategic and tax advantages. For example, investments of less than 25 percent can receive inheritance tax relief.
There is also a clear change in terms of industry preferences. While software continues to dominate as a capital-light and scalable sector, GreenTech has drastically lost its appeal. Real estate, once a favorite among conservative investments, is also in less demand. This industry rotation reflects SFOs’ desire not only to generate returns but also to actively influence their holdings.
The active influence of the SFOs is reflected in the fact that 88 percent of them are actively involved in their investments. A significant proportion take on operational or advisory functions, while only a small percentage act as pure financial investors. This proximity to companies clearly distinguishes them from classic private equity funds and enables them to directly influence strategic decisions.
Interestingly, only 25 percent of SFOs adopt a pure buy-and-hold approach. The majority say they do not define a fixed exit strategy, which gives them the flexibility to act opportunistically and think long-term. This flexibility is an essential part of their self-image and enables them to act independently of fund maturities.
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