Irreplaceable Capital and Investment in Start-Ups: Do Family Offices Behave in a Particular Way?
Résumé
The relative importance of family offices (FOs) in the financing of start-ups has doubled in the last decade. Despite their growing importance, FOs have so far received very little attention in the academic literature on entrepreneurial finance. The present research is therefore a pioneering effort to learn more about this category of investors. After explaining the origin and rationale of FOs and presenting a typology of these investors based on the existing literature, the central hypothesis is that FOs are more risk averse than traditional venture capital funds. This hypothesis that FOs prefer stable, profitable companies over more innovative companies is tested here on a sample of 291 French ICT start-ups that have received venture capital funding. Our findings confirm that this type of investor exhibits more cautious investment behaviour than traditional funds. This constitutes a first contribution to our poor understanding of the investment behaviour of FOs in the field of start-up financing.