Family offices have increasingly adopted a hybrid approach to venture and private equity investments, balancing direct investments (or co-investments) with commitments to venture funds. As of 2025, trends show a clear shift toward directs amid a decline in traditional fund commitments, driven by desires for greater control, lower fees, and alignment with family expertise. According to PwC’s Global Family Office Deals Study 2025, fund investments have dropped sharply (e.g., from peaks in 2021 to low volumes in H1 2025), while direct and club deals dominate, with venture capital maintaining a strong 31% share of investments.
Direct Investing and Co-Investments
Direct investing involves family offices deploying capital straight into startups or private companies, often alongside trusted partners in co-investments or club deals. This approach offers full control, no management fees (typically avoiding the 2/20 structure of funds), and the ability to leverage family-specific knowledge in sectors like AI, healthcare, or sustainability.
In 2025, directs are thriving: BNY reports nearly two-thirds (64%) of family offices anticipate making six or more direct investments, while PwC notes that 83% of family office startup deals are now co-investments or club deals—allowing selective, high-conviction participation with reduced risk and enhanced returns. Larger or more sophisticated offices (especially single-family offices with in-house teams) favor this for hands-on involvement and patient capital deployment over decades.
Challenges include the need for robust internal expertise, due diligence capacity, and governance—understaffing remains a bottleneck for many.
Investing Through Venture Funds
Committing to venture funds provides diversification, access to professional deal sourcing, and managerial expertise without building large internal teams. Funds are ideal for smaller or multi-family offices seeking broad exposure across stages and sectors.However, 2025 data reflects a pullback: UBS reports private equity allocations (including funds) dipping from 21% in 2024 to planned 18% in 2025, partly due to higher financing costs and slower exits. PwC highlights a sharp decline in fund transactions, as family offices prioritize directs for better net returns and strategic fit.
Many blend both: using funds for scale and diversification while reserving directs/co-invests for thematic or high-control opportunities.
Key Differences in 2025 Context
- Control & Fees → Directs: High control, no/limited fees. Funds: Delegated management, 2% management + 20% carry.
- Risk & Diversification → Directs: Concentrated, higher potential returns but requires expertise. Funds: Spread risk across portfolio.
- Time Horizon & Involvement → Both benefit from patient capital, but directs enable deeper strategic support (e.g., board seats, networks).
- Trends → Shift to directs/co-invests amid economic uncertainty; alternatives ~44-48% of portfolios (UBS/BNY).
Key Takeaways for Fund Managers and Entrepreneurs
- Family offices contribute ~31-40% of startup capital globally in 2025, increasingly via directs/co-invests (83% of deals).
- Offer co-investment rights to attract funds commitments while appealing to direct preferences.
- Emphasize alignment with family values, long-term vision, and strategic value—warm introductions remain critical.
This blended strategy allows family offices to optimize returns and legacy impact—fund managers and entrepreneurs who facilitate flexible structures (e.g., co-invest options) are best positioned in this evolving market.