If you are a founder of a biotech or life science startup, you don’t want to miss this episode. If you’re not, you may still find it fascinating. I talked to Sal Buscemi about family offices and what kinds of assets they invest in.
Until recently, I didn’t know what a family office was. These are people or families with at least 100 million dollars of investible assets. They represent a unique source of funding for startups. They have different goals and timelines than a typical VC firm. As a result, you’ll need to take a different approach to communicating with them.
The takeaway here is the same as always for good marketing. Know your customer, and what they value. Craft your message/offer around that.
When you have that much money to invest, you certainly want a return but you also want to make an impact. And let your friends know about it. They are looking for statement-class assets. These are assets that are a conversation starter anywhere you go. Successful people want to be associated with successful people from other industries. Example: Be the first to show up with a million dollars and have a Nobel Prize winner join your family for lunch.
As I mention in the podcast, no one will shed a tear for the folks who have millions to invest to make more money. But there is a psychological burden on the 2nd and third generations. How do you demonstrate your own value, your skills, etc in the shadow of inherited wealth? Sal points out the scene in Ford vs Ferrari where Enzo Ferrari insults Henry Ford Jr by reminding him that he is not Henry Ford. He’s Henry Ford the 2nd.
So the question for them becomes, “What’s the best way I can make an impact?”
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Sal stressed the importance of relationships. Patience is your friend. No “quant-splaining.”
People today, if you were to do some research, they don't trust facts and figures anymore. They trust the stories, and that's really what it is. And they want to make sure that if they're sitting in front of someone, that person's gonna make the best decisions as a steward of their wealth and capital to go into it. Because at the end of the day, and everybody listening to this as a founder should really, really figure this out. Nobody is going to part with their life savings unless they give you their time first. And that's so important to remember.
And here’s a bonus, I think especially for life science and biotech companies. Some of these investors are looking at longer time horizons than a VC firm.
If you look at anything on LinkedIn or maybe on bloomberg.com, you'll see that, there is a bias right now where a lot of these families are going in and they're getting the same terms that, you know, any other fund would get, but they don't want to be alongside the fund because they don't wanna have someone that doesn't have at least a 10-year horizon with this. And I can tell you there's some families that say, Sal, don't even talk to us unless it fits our 40-year plan.
Finally, Sal noted the importance of media, going on podcasts! and having an online presence that your investors can point to that, again, make them look good. I have some ideas around that. See below and be sure to listen to the full episode.
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Free Book: Calling the Capital
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Family Offices as a Source for Funding Life Science Start-ups