Entrepreneur Office Hours - Issue #77
Entrepreneurship Office Hours goes TikTok 🤯
Since I’ve mentioned it a few times, you might already know my favorite course to teach is social marketing. Because of that, I spend lots of time researching and studying social media. And, no, I swear that’s not just a convenient excuse to justify spending hours scrolling through Instagram, Twitter, and Reddit.
Whatever. Don’t @ me.
Anyway, the point is, I’ve spent the past couple of years studying — or “studying” — TikTok while trying to figure out how to use it as a tool to present content about entrepreneurship. It’s a bit tricky because TikTok is a visual platform and entrepreneurship isn’t a visually compelling subject. After all, who wants to watch videos of someone staring at their customer acquisition metrics or sending cold emails?
Still, I feel like I really need to give it a shot. So I’ve finally taken “the leap” and launched a TikTok account. Check it out! And follow! And like! Watch all videos hundreds of times so it tickles the algorithm and makes me TikTok famous.
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Office Hours Q&A
I’ve got a term sheet and am looking to go into due diligence with a “family office.” I was wondering if you had any experience taking investment from a family office and whether or not you knew of any advantages or disadvantages.
First, congrats! Getting a term sheet is great.
As for the advantages and disadvantages of a family office, I suppose I should start by explaining the term for anyone reading who isn’t familiar.
Family offices are wealth management firms for Ultra High Net Worth individuals. In other words, some people are so wealthy, they basically have entire companies working for them just to help them manage all that money.
Must be nice, huh?
Anyway, part of that money management involves making investments. And, when you’re talking about someone with a few billion dollars in the ‘ole piggy bank, it means the person can afford to drop $100 million into what is, essentially, a personal VC fund.
Full disclosure: I’ve raised money from a family office. My personal experience was that it was very similar to pretty much any other VC except a bit less formal and bureaucratic. However, I can’t say with any certainty whether that would be the case across the board. I suppose it depends what family offices you’re raising money from and what VCs you’re used to raising money from.
Overall, my sense is there’s not a huge difference. Certainly nothing unique to be concerned about. You just need to be careful about what deal terms you accept since the investment terms are going to be the thing that impacts the overall relationship and experience more than anything else. And, of course, that’s true of all capital you take regardless of where it comes from.
The only major consideration might be the resources/support a family office can give you beyond money. Again, this will all vary from office to office, but a major VC firm is probably going to be more fully geared toward supporting entrepreneurs in other aspects of their businesses (e.g. hiring) when compared to a family office that’s busying itself with lots of other things. But, again, some family offices are going to be better than others, just like some VCs are going to be better than others.
The last distinction I’d note is that family offices usually have a broader range of investments because their investment thesis isn’t as restricted by the terms of their funding source. That doesn’t matter much to you, Arnold, because you already have a term sheet; however, if you’re reading this and don’t already have a term sheet, family offices might be a good way of expanding your potential investor pool, particularly if you’re in a market segment that doesn’t have as many investor options.
Got startup questions of your own? Reply to this email with whatever you want to know, and I’ll do my best to answer!