Family offices: how are they different?
This study investigates whether firms backed by family offices differ in performance outcomes from those backed by PE or VC. It also evaluates differences in growth and profitability, using two matched samples. The findings show that family office-backed companies have highly significant lower growth compared to their venture capital-backed counterparts, but no different growth from private equity backed companies. Furthermore, for return on assets, there is no significant difference between a FO-backed company compared to their VC-backed or PE-backed counterpart.
The rise of family offices: unexplored and highly secretive
Over the past two decades, the landscape of private capital has undergone a quiet yet profound transformation. While private equity (PE) and venture capital (VC) have long dominated the conversation, a more discreet player has emerged: the family office. Once focused primarily on wealth preservation, family offices are now active investors in private companies, shaping strategy, governance, and growth. In Belgium, names like Alychlo (Marc Coucke), Korys (Colruyt), D’Ieteren, Verlinvest (Alexandre Van Damme), The Nest (Els Thermote, TVH), and Baltisse (Filip Balcaen) illustrate the growing influence of this investor class — and at least one of these names likely resonates.
Globally, the rise is even more striking. From approximately 6,130 single family offices in 2019, the number has surged to an estimated 8,030 today, with projections reaching 10,720 by 2030 — a 75% increase. Notably, three out of four family offices were founded after 1990, underscoring how young and dynamic this sector is. Their investment scope is expanding beyond traditional asset classes into direct investments, impact ventures, philanthropy etc. reflecting the diverse priorities of the families they represent. Despite their growing footprint, family offices remain under-researched. Unlike PE and VC firms, which have been extensively studied since the late 1990s, family offices operate with limited transparency, making it difficult to assess their investment behavior and impact. This gap in the literature prompted a central question for my dissertation: how do family offices differ?
This study investigates the performance of companies backed by family offices in comparison to those supported by private equity (PE) or venture capital (VC) firms. Two key performance indicators are examined:
- Growth, measured by total asset growth
- Profitability, measured by return on assets (ROA)
The analysis is based on two matched samples: one comparing 72 family office-backed companies to 129 VC-backed companies, and another comparing 87 family office-backed companies to 164 PE-backed companies.
It is hypothesized that family office-backed firms exhibit lower growth due to the absence of fixed exit timelines, which may reduce pressure for rapid expansion. In terms of profitability, outcomes are expected to be similar to VC-backed firms, which often prioritize growth over margins, but to diverge from PE-backed firms, which typically enhance profitability through operational and financial restructuring.
By highlighting these distinctions, the study contributes to the ongoing discourse on the role of family offices in private capital and the influence of their investment philosophy on portfolio company outcomes.
How the unique position of family offices defines portfolio companies’ outcomes
This analysis examines the relationship between the impact of family office ownership compared to private equity or venture capital and both profitability and growth across a large panel of firms, controlling for firm- and time-specific factors.
The findings reveal that companies backed by family offices tend to grow significantly more slowly than those backed by venture capital firms. In the first three years following acquisition, growth among family office-backed firms was 57.2% to 84.4% lower, and even seven years post-acquisition, growth remained 88.4% lower! These results suggest that family offices pursue a more cautious and patient investment approach, in contrast to the aggressive scaling strategies often employed by VC investors.
One explanation lies in the value-added role of venture capital. VC firms typically provide more than capital — they offer access to industry networks, market credibility, and active governance. These resources can accelerate expansion, particularly for younger firms. Family offices, by contrast, may lack the same institutional infrastructure and sector-specific expertise, potentially limiting early-stage growth momentum. When comparing family offices to private equity firms, however, the differences in growth were far less pronounced. Across most tests, growth rates were not significantly different, indicating that family offices may be increasingly adopting private equity-style practices. Yet, they remain distinct from the VC model, which is often characterized by rapid scaling and short-term exit strategies.
The substantial difference in growth over a period exceeding seven years results in a significant compounding effect on portfolio companies. As illustrated in the graph below, the lag in growth for family office-backed companies was modeled and compared to venture capital-backed companies, assuming a 20% annual growth rate. After seven years, the venture capital-backed company is 164% larger than its family office-backed counterpart.
When the same graph is generated using an assumed growth rate of 50%—a figure not uncommon in the start-up and scale-up ecosystem—the venture capital-backed company is 718% larger than the family office-backed company. That is more than 7x the size of the family office-backed company.
For profitability, this study suggests that while companies backed by family offices may initially lag in profitability after acquisition compared to those backed by venture capital firms, the difference disappears within a few years. In the first two years post-acquisition, return on assets (ROA) was slightly lower for family office-backed firms, which could be attributed to transitional costs or a slower focus on immediate performance gains. By the third year, however, profitability levels had caught up. When compared to private equity-backed firms, no significant differences in profitability were found at any stage. This challenges the common perception that private equity’s more aggressive performance strategies — such as restructuring or asset sales — consistently yield superior results. Instead, the findings suggest that the steadier, relationship-driven approach often associated with family offices can produce comparable outcomes in the long run.
The study also highlights broader profitability patterns: larger firms tended to perform better, while companies with rapid pre-acquisition growth or high levels of debt often struggled to sustain profits. Overall, the results point to a more nuanced reality — in terms of profitability, family offices and private equity may be more alike than previously thought.
Same as private equity, different from venture capital?
This study has shed light on how different kinds of private capital investors — family offices, venture capital firms, and private equity firms — shape the growth and profitability of companies after acquisition.
The research finds a stark divide between family offices and venture capital. Companies backed by family offices grew significantly more slowly than those with venture capital funding, with growth rates up to 84,4 percentage points lower in the first three years after acquisition. This gap reflects the more cautious, long-term mindset of family offices, in contrast to venture capital’s aggressive scaling strategies and hands-on governance. Yet, despite the slower growth, family office-backed firms matched their venture capital-backed peers in profitability over time — suggesting a focus on stability and enduring value rather than rapid expansion.
When compared with private equity, the differences all disappeared. Growth gaps between family office- and private equity-backed companies were modest and short-lived, while profitability levels were essentially the same. The findings suggest that many family offices operate like private equity firms, combining professional management and strategic growth planning.
Together, these findings allow business owners to better assess which type of private capital provider they would want to partner with.
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Schickinger, A., Bierl, P. A., Leitterstorf, M. P., & Kammerlander, N. (2023). Family-related goals, entrepreneurial investment behavior, and governance mechanisms of single family offices: An exploratory study. Journal of Family Business Strategy, 14, 100393.
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