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Large Corporates and Family Offices: A Need to Connect

Rob Day: January 30, 2012, 3:41 PM

One thing many cleantech VCs are good at is connecting with large corporations' strategy and venture groups. They regularly chat to compare notes, discuss market trends, share investment perspectives, identify areas of needed investment, opportunities to work with the VCs' portfolio companies, etc. It's a win-win.

I was surprised upon joining the family office community to discover that these groups are (with some definite exceptions) not as good at this. There are probably several reasons: 1) family offices are often already affiliated with some companies that the family owns, dampening the supposed need; 2) corporate strategic groups don't think about family offices because the FOs aren't asking them for money as LPs; and 3) family offices are generally not very good at networking to begin with. There are certainly some FOs that do have good outreach to corporate groups and vice versa, but it remains an untapped opportunity.

I've been meeting and speaking with corporate leaders for the past few months, to argue for a need for much more regular communications between the two communities. The reasons for family offices to more regularly connect with strategics are the same as for VCs. And smart corporate teams are starting to recognize the unique and additive value to holding such conversations with family offices in addition to their existing conversations with VCs.


First of all, family offices are much less limited in terms of the types of business and projects they can invest in. They can be more patient and more flexible. This means they'll often be looking at a different scope of opportunities than the VCs might be. Some FOs will be looking at very early, long-development, really-big-upside opportunities that would take too long for VCs to invest in, at least at that seed stage. This is especially true when one broadens the definition of FOs to include very wealthy individuals. Others will be more open to investing in different service and business models instead of the proprietary technology plays that VCs continue to favor (at least in this sector). Still others will be able to invest in project finance opportunities. In one of our investments at Black Coral Capital, we invested as project investors into a pool of capital alongside a venture-type corporate equity investment by a large corporation in the developer of the pool. These are the kinds of collaboration opportunities that corporates miss if they're not engaging with the family office community.

Secondly, despite some instincts to the contrary, the fact that the family office is often tied to other, larger family-owned businesses means that there are other reasons to hold the conversation as a means of building broader relationships than just common investment opportunities.  

Thirdly, that family offices aren't looking for LP dollars means they will be able to express a different perspective than many VCs will in the same situation.  No one ever provides a 100% objective perspective, but at least in these conversations the corporate team is talking with a professional investor who's not trying to sell them on investing in their next fund.

So should corporate strategy teams start reaching out broadly to the family office community?

Unfortunately, if you know one family know one family office. No two are alike. There are an estimated 3,000 or so single-family offices of significance in the U.S. (BTW, here's a useful primer). But many aren't going to be as valuable a connection as they should be for the corporate team.  

Most family offices aren't in the business of doing direct investments into applicable companies. Many have wealth preservation, rather than wealth creation, goals. When they refer to doing "alternative investments," they may simply mean they're allocating dollars into hedge funds in addition to mutual funds. Very few family office gatherings revolve around the challenges and trend-spotting involved in direct venture and project investing.

Many family offices have simply been passive co-investors with big-name venture and private equity firms. I'm not going to criticize that strategy (in this column, at least), but for the purposes of this discussion it's enough to note that the corporate teams will get more insight from talking with the lead institutional investors these FOs are following.

And fewer still family offices do direct investments into cleantech. Starting from 3,000+ applicable single family offices, the number of FOs doing direct lead investments into cleantech private equity is bigger than you might think -- but it's certainly a very small subset of the 3,000+.

All of which is why we co-started the Cleantech Syndicate a couple of years ago (along with over a dozen other family offices, plus our friends at McNally Capital). We found it was best to aggregate a bunch of these rare entities upfront and build relationships across the teams, rather than wait until we had specific co-investment opportunities and then had to go seek them out in this opaque community on short notice.

Which speaks to the need for corporate teams to be very targeted in their outreach to the family office community. My message to the corporate teams I've been meeting with recently has been, "You should do more to engage with family offices and high net worths. But you should do it selectively, using these specific criteria." There's no magic here, there's just some simple catching up to do to get conversations between corporates and FOs up to par with existing conversations between corporates and VCs. It's worth doing. But it's important to do it right.


Allow me to hijack this space real quick for something different.  An old colleague of mine reached out and is doing something very cool, so I offered to let him write a blurb about his efforts to share with all of you.  Enjoy!


"I'm writing about an exciting education program my organization, The Keystone Center, runs around the country called the Youth Policy Summit ( We take groups of students to analyze a tough public policy problem, like water scarcity, climate change or childhood nutrition.  We teach the students to analyze the different facets of the problem, including the political, social, economic and technological, as well as different stakeholder views from industry, advocacy groups and government regulators. We provide the students with mediation and negotiation training.

"Students meet with adults from these different stakeholder groups, and then assume the roles of these players as they work to find consensus-based recommendations. They take their suggestions back to their communities and to local legislators and business leaders. More importantly, we have worked with past sponsors to identify future interns and workers.  We truly feel that we are creating the leaders of tomorrow's workforce.

"We have conducted 22 summits over the past eight years, and have found that students care passionately about sustainability, and are passionate about energy and water issues whether they are from rural Appalachia, downtown Detroit, or the Upper East Side of Manhattan. The program trained 125 future entrepreneurs last year, 80 of whom were non-white. They are now entering college with a newfound vision to make the world more sustainable, and to seek opportunities in science and technology to help us get there."

Anyone out there who wants to get involved or support this effort should feel free to track down Jeremy Kranowitz at the Keystone Center (

“How Do I Get a Job in Cleantech Venture Capital?”

Rob Day: January 10, 2012, 7:38 PM

Around this time of year, the amount of inbound requests for coffees and "picking your brain" chats is always pretty overwhelming, as business school students and others start thinking about how they would love to be a cleantech venture capital investor.

I wanted to write down a few thoughts for such folks in case they would be helpful. Unfortunately, much of what I have to give is simply tough love. Because it's very, very hard to break into cleantech venture capital. When you account for the few specialist teams out there still actively investing in the sector, and then further account for the number of such firms that are hiring any new associates, I would estimate there are probably only one to two dozen new positions in the industry each year for anyone who doesn't already have deep experience. At most. Last year I think it was even less than that. There's at least 10 very interested job seekers for every one available entry-level cleantech venture job, and probably many more.

So with the caveat that no matter how smart you are, the numbers are stacked against you, here are some suggestions:

1.) Think hard about why you want to do this type of job.

I know one of your b-school classmates spent their summer interning with a venture firm and has been quietly lording it over everyone else; don't fall for their swagger. It's not the most direct pathway to achieve your goals, whatever they are.

If your goal is to make money, go into project finance or hedge funds or buyouts or Wall Street.  

If your goal is to make a significant impact on the cleantech industry or on the environment or such, go into a large company and work to make them more green. There, even a small shift makes more of an impact than most cleantech startups ever do.

If your goal is to find yourself doing a lot of exciting entrepreneurial things, go be an entrepreneur.  

If you're looking for job stability and an easy work-life balance, you're definitely barking up the wrong tree.

Venture capital is simply not the best way to accomplish any of those goals. Be honest with yourself about what you really want to do, and also don't fall for the Sunday New York Times-type hype about how VCs are heroes of the innovation world. That's a carefully crafted image some VCs have put out there, very much on purpose, but the true heroes are the entrepreneurs and the corporate managers who go out on a limb to work with entrepreneurs. They actually make stuff happen -- they're the ones to really be admired. There are lots of more impactful (albeit less heralded) ways to accomplish your goals than being a VC, I can pretty much guarantee it.  Don't get me wrong, it's a really fun job if you can land an opportunity in the field -- I love it with a passion that grows the more I time I spend doing it. But I can also tell you that if you want to be a cleantech VC for somewhat romantic and unresearched reasons, you probably won't be a good one anyway.  

And don't think that if you get an entry-level job in cleantech VC your future is secured. It's an up-or-out type of industry, and for the most part, the associates end up going out instead of up. There simply aren't enough openings at the partner level to sustain even the number of justifiable advancements, and it's hard to do well, so there are a lot of folks who find they don't like it or can't cut it. It can be a good springboard into other things, often entrepreneurial endeavors, and can be a very educational experience, but don't fight for an entry-level VC position and then think you've pegged your career for the next 40 years. Heck, venture capital as we know it may not be around 20 years from now -- it's a broken model.  Do you really want to fight to get into a shrinking club?  

In other words, don't go after a cleantech venture job unless you're deadly serious about it.

2.) Network, network, network. But don't just do quick calls and coffees. Do something meaningful.

Yes, there's no substitute for networking your way into a venture capital gig. VC firms typically don't advertise when they're thinking about hiring a new associate, so it's often a matter of right place/right time. One strategy is to watch for announcements of firms that have done first closes on a new fund. That often is a trigger for new investments, and perhaps some changes to the existing team (either up or out), and thus maybe they'll be looking for someone to bring on board. So start with such searches -- but don't be satisfied just talking to someone there.

No one gets hired into a venture capital firm because they impressed one of the partners there over a coffee or during a phone chat. And disappointingly, VCs also don't talk to other VCs about how they're hiring a new associate or such. It just doesn't come up very often. So the idea that a VC you talked to will follow up with you, out of the dozens who chatted with him/her, to let you know about another firm that's hiring an associate is a pipe dream.

The only way you get hired into a venture firm is by impressing them with your ability to actually add value, either to portfolio companies, or to the diligence process. Here are a few networking-your-way-into-VC dos and don'ts:

DON'T try to impress a VC with a couple of general investment theses you've come up with. They've been doing this for longer than you have, they've seen several companies fitting that thesis already, and have already been all over it six ways till Sunday.  

DO pick one subsector you're going to get super-smart about and dive into it. I still remember a b-school student I knew several years ago who decided he would become an expert on building-integrated PV.  He ended up in an operating role instead of an investing role (see point #1 above), but I still periodically catch up with him. If you want to stand out because of what you know and who you know, stand out as a specialist, not just a clever person.

DON'T ask for "thoughts and advice."  It's often a waste of time for both of you.  

DO ask for quick thoughts about specific companies you bring to the table, especially if they're in a subsector you're trying to become a specialist in. An investor is much more likely to give you tactically valuable information if you ask them for specifics instead of generalities.

DON'T ask them to refer you or intro you to their colleagues if they don't already know you well. Venture capital is a reputation-driven industry. No one wants to get a reputation for having sent time-wasters to go bother other investors.

DO ask them if they know of any firms that are about to close on a new fund but may not have announced it (as per the above).

DON'T try to impress a VC by bringing them a startup they likely already know about. If you found out about the startup by reading about it somewhere, the VC already knows about it. If you bring them a stealthy or super-early effort, maybe that will elicit some interest, but it better be a really promising company and not just a fellow b-school classmate's whimsy.

DO get to know VCs by putting significant time into supporting efforts they'll care about -- activities like the MIT Energy Conference that will be bringing in VCs. Even better is getting involved in nonprofit efforts that cleantech VCs are involved in, either professionally or on the side. Find any excuse to spend some quality time with the VC over a shared task, in other words, instead of just a quick coffee and some bland advice.

DON'T criticize a VC's investments. If you really have something to get off your chest, do it with appropriate caveats.

DO see if there are ways you can deliver some real value through a dedicated project. Offer to do a market map. Offer to do some specific biz dev research for a portfolio company. And best of all, intern. An internship is your single best pathway into VC, at least for young professionals.

Show the VC how valuable you are; don't expect them to get that on the basis of a brief interaction and a resume, or to hire you based upon your unproven potential. The great thing about the DO items listed above is that they also position you for other fun roles besides VC, leveraging the same experiences and knowledge and networks you've built.

3.) Expect contradictory advice.

Aspiring VCs often go to established VCs and ask them for advice as to how best to become a VC. Since "don't bother" or "be lucky" aren't very satisfying answers, the VCs give advice as best they can, but it's often very contradictory, leaving the aspiring investors even more confused. Why?

First of all, there is no standard path into venture capital. Everyone got there via a unique path.

Secondly, since there's no right way to do venture investing, there's no right way to break into venture investing. VCs who are former entrepreneurs will tell you to go be an entrepreneur. VCs who are former investors of another type will tell you to go get some other investing experience. VCs who are former consultants will tell you to go prove your value by doing market maps or doing some specific business development research for a portfolio company.

In general, I think former entrepreneurs do have a better shot at becoming VCs -- and then at being good VCs. So much of the role involves networking with entrepreneurs, knowing the challenges of being an entrepreneur, and being able to provide value to entrepreneurs. So an entrepreneurial background is a very useful thing, more useful than being a consultant or a banker.  

And who knows, you might decide you like being an entrepreneur better anyway; who cares about going over to the dark side and becoming one of those meddling VCs?

4.) Have a Plan B that you pursue just as actively, in parallel.

Be prepared for your quest to network your way into a VC role to take a long time, and very likely to end without you getting such a role, since the odds are stacked so heavily against you.

The smartest thing you can do is have another plan (or even more than one) that you pursue in parallel that you would also be excited about. Create options for yourself.  

Many VCs find themselves in the career by accident, having stumbled into it along the way. In fact, that's what happened with me -- I started doing some project work for a cleantech venture firm as a way to get smart about what entrepreneurial opportunities I could identify in the sector, and ended up getting hooked by the venture capital work instead.


So go out there open-minded.  Look for activities you can do that will build deep knowledge in particular areas, and rich networks across investors, entrepreneurs and experts And then you'll find a good way to leverage those assets one way or another. If by networking with and working with VCs you find an opportunity there, grab it.  But if you find a really rewarding entrepreneurial experience for yourself instead, grab that and run with it.  

The twisting road may bring you back that way later on anyway.