Building a venture program for the next generation of a family

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Start with purpose, then structure, then managers. Venture often appeals to the next generation of a family because it connects capital to new companies, technology and ideas they care about. A program built around that interest can be both a sound allocation and a way to bring family members into investment decisions. It works best when the family agrees on why it is investing before choosing what to invest in.

Settle the purpose first

  • Financial return. Venture as part of the family's long-term growth allocation.
  • Learning and involvement. A structured way for family members to learn how investment decisions are made.
  • Impact or interest. Exposure to sectors, regions or founders the family wants to support.

Most programs combine these. Writing down the weights helps resolve disagreements later, for example when a manager aligned with the family's interests underperforms.

Choose a structure that fits

  • Fund commitments. The most diversified route and the least demanding on time. A good starting point.
  • Funds plus co-investment. Adds direct exposure alongside managers the family already trusts. It requires more capacity to evaluate deals.
  • Direct investing. The most involved and the most concentrated. Usually better as a later stage than a starting point.

Bring family members in deliberately

Give next-generation members a defined role, such as sitting in on manager meetings, writing up one manager each year or joining an investment committee as an observer. Pair them with experienced advisers or principals. Emerging managers are often a good fit, since they tend to be accessible and willing to explain their thinking.

Document as you go

Record why each manager was chosen, what the family expected and how it turned out. Over a fund's ten-year life, that record becomes the program's institutional memory and the best training material the next generation will have.

Related questions

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