Welcome to this week’s edition of Cape May Wealth Weekly. If you’re new here, subscribe to ensure you receive my next piece in your inbox. If you want to read more of my posts, check out my archive. This week’s guest article is brought to you by Benedikt Langer of Embracing Emergence. Besides a common ancestry in beautiful Schwaben, Benedikt and I both have backgrounds in the family office space. In his newsletter, he shares helpful insights for emerging GPs on what LPs really want. Today, he shares his experience in what emerging managers should keep in mind when working with family offices - a common question that we get asked as well. Enjoy!

You have probably heard this over-used saying before, but if you have met one family office, you have met one family office. I cannot give out a recipe on how to successfully pitch a family office, simply because they are all different. Their origin story, their values, their structures, the engagement level of the family members, their investment goals, and the final decision-making process, can widely vary between family offices. 

But many have one thing in common - a unique story of sacrifice, perseverance, and success. Behind the emergence of many family offices stand people who took a risk, sacrificed something most wouldn’t and succeeded. 

I always try to tell Emerging Managers, especially those in their first fund, that if they are pitching a family office in which the first and second generations are still involved in the decision-making, to not underestimate how much the sacrifice of leaving comfort behind to pursue their true passion and dream and starting their firm can resonate with the story of the family.

My advice to Emerging Managers is to learn about the journey of the family before their “family office” and find elements that resonate with your own story and reason behind starting your fund. It might not make all the difference for a final “Yes”, but I would not underestimate how much of a connection it can create - it gets your foot in the door.

When pitching a family office, you are most likely pitching a person, who is then also pitching a person.

From my experience, this is an incredibly important and yet oftentimes underappreaciated aspect to consider when going through the underwriting process with a family office.

When working with a family office I learned pretty quickly that before I was pitching the track record of the Emerging Manager, it was my track record that was assessed first. Look, any founder knows this when pitching the Associate/Analyst and then Principal or Partner. A similar process can apply in a family office setting.

The conclusion should be that it is critically important to give whomever you are pitching the right language and insights about you and your strategy to deliver a compelling pitch about you.

The language here is everything. With the best Emerging Managers, I experienced their conversations with me to be succinct, their story strategic, and their language memorable and cohesive that I had a distinctly easier time retelling their story compellingly in comparison to other Emerging Managers. 

Family offices pursue different investment strategies simultaneously. They most likely will feel “at home” and most comfortable in a specific strategy and will be in a learning process in others. Venture Capital is, more often than not, one strategy the family office is currently learning more about and interested in increasing their allocation to. Learning itself means different things to different people - ideally, the family office perceives investing as a craft, which means that even with high proficiency, lots of learnings remain to be experienced. 

So, as the Emerging Manager it is important to understand how much the family office is planning on allocating to your asset class over the next given timeframe. This, in addition to their typical check size and investment goals, will give you an idea of what weight their decision to invest in a fund has. 

From there you can assess how long the diligence process could take, you can prioritize your efforts accordingly, and set expectations. It can also help you understand how you can set yourself up for success in the process. Should you cover more basics than typical? What current concerns about Venture should you address? If the family office is just beginning to invest in VC, how should you think about positioning your differentiation as a fund? 

A best practice here? Be transparent and direct. Ask the right questions at the appropriate time - I can’t think of any LP who does not appreciate the honest attempt of contextualizing the diligence process so both parties can be on the same page.

As the fundraising legend John Kim said in his recent interview, “money moves at the speed of trust.” This is true for any GP-LP relationship. But in my experience, it’s especially true when partnering with family offices. 

First, I will give a framework of how trust can work between people and how to think about it. Then I will give some practical things you can do to establish trust with a family office. There is actually a psychological framework that underlies the concept of money moving at the speed of trust. Something I am sure John Kim is aware of.

In any sales process, the “buyer” assesses two aspects of the “seller”: 1) Intention, and 2) Competence / Ability.

If the intentions aren’t clear and trusted by the buyer, the seller can be as competent as they want to be, there is a low probability that the needed trust gets established for the transaction. Hence, people need to trust you first before they can also realize how competent and able you are.

One of the most strategic ways to show your intentions quickly and honestly is by being authentic. Then you can get to the sale.

The actual research behind it is based on Susan Fiske's work on social cognition (the Stereotype Content Model). Which found that people judge warmth, or intention, before they judge competence when forming an impression of someone.

This judgment also carries more weight: if someone's intentions read as self-serving or untrustworthy, their competence stops mattering much, because the relationship gets written off before ability is even considered.

There is also a further point worth adding. If competence is perceived before intention is clear, it can actually work against the seller, rather than simply being neutral. Fiske's research on the Stereotype Content Model found that when someone is seen as highly competent but their warmth or intention is ambiguous or low, they tend to be judged more harshly than someone who is low in both competence and warmth.

This combination often produces suspicion, resentment, or even a sense of threat, because a competent person with unclear motives is seen as more capable of acting against your interests. In other words, skill without a clear read on intention does not land as impressive, it lands as risky. This is consistent with everyday intuition about the "smooth talker" or "slick salesperson" effect. High competence on its own can raise a buyer's guard rather than lower it, because it signals capability without yet signaling whose benefit that capability will be used for.

This reinforces why establishing intention early is not just a nice first step, but a way of avoiding a negative outcome, since demonstrating competence too early or too forcefully, before trust in intention is established, can backfire.

Being authentic is like walking into a room with your arms held up high, showing you’re coming without any hidden weapons and good intentions.

And it’s not just a helpful thing to do, it’s a strategic thing to do. Especially when it comes to family offices.

The first simple, but important piece of advice: be honest. I am being intentionally plain here. It’s a Limited Partner’s job to find red flags and most are not hard to find.

For example, if your track record is limited, be upfront about it. Then make a good case of why you’re the right person to take the bet on.

Show that you are honest about the risks. They exist regardless, so might as well have a conversation about them.

Another thing you can do, and this might be counterintuitive to people: make introductions to other funds. Some of the best GPs I have encountered very openly introduced me to other GPs they have thought highly of.

This signals me a couple of things:

Many family offices are looking for early-stage exposure, but simply don’t have the capacity to track everything that is happening at the Seed stage. Introduce them to founders, other strategic connections, and the technological innovations that you are seeing. Be their eyes that can look around the corner into the future.

Generally, just be helpful to the family office. As mentioned earlier, family offices do a variety of different things. Find out what they are up to, where your experience can be helpful, and be a practical source of value and wisdom.

If you take anything away then let it be that family offices are oftentimes not simply underwriting a fund. They are underwriting you as a person. Your track record matters. Your strategy matters. Your references matter.

But over time, I have become convinced that what family offices are really trying to understand is whether they can trust your judgement for the next ten or fifteen years.

That is a much higher bar than delivering a compelling pitch. It is also a much more meaningful one.