VC is being quietly disrupted from the inside.

Family offices are no longer satisfied with being LPs. They’re hiring former VC partners, cutting out funds, and deploying capital directly into startups. What used to be a passive capital source is turning into a new kind of competitor — one with patience, flexibility, and, crucially, permanent capital.

This isn’t just a few edge cases. According to PwC, nearly a third of global startup capital in 2022 came from family offices. At the same time, traditional venture capital fundraising fell off a cliff — down 60% in 2023 alone, according to PitchBook and the Financial Times.

Over the last few months, I started picking up on this trend in private conversations with family offices. The message was consistent: why keep paying 2% fees and 20–30% carry when you can bring that talent in-house? Why follow someone else's timeline when you can make your own rules?

From the talent side, it makes sense too. If you're a seasoned VC partner in today’s dry fundraising market, what would you rather have: constant pressure to raise another fund, or a permanent pool of capital and a lean team inside a family office that lets you just invest? No wonder there’s a quiet migration happening. Former partners are finding family offices more appealing than ever — less pressure, more capital, and the ability to make decisions faster.

Some family offices are hiring partners. Others are building full investment teams. Most are still figuring it out — but the direction of travel is clear. According to BNY, 64% of family offices plan to make six or more direct investments in 2025. That’s not dabbling. That’s a strategic shift.

In practice, this creates ripple effects across the entire ecosystem. Traditional VC funds — especially emerging managers — are finding it harder to raise from family offices who used to be reliable LPs. Those same families are now taking meetings directly with founders, often bypassing funds entirely. What we’re seeing is not just a change in capital flow — it’s a reallocation of trust.

Direct investing means building internal infrastructure for sourcing, due diligence, and portfolio support. And some families have learned the hard way — jumping into hot sectors they didn’t understand and burning capital. Unlike VC firms, most family offices aren’t plugged into founder communities or startup ecosystems. They don’t see thousands of deals. Their bandwidth is limited. Their investment cadence can be slower, and decision-making often depends on internal dynamics, family values, or non-financial goals.

And yet, that slower pace can also be a strength. Family offices are typically investing their own capital — not someone else’s — which allows them to operate with more long-term thinking and less pressure to manufacture fast returns. There’s no fund cycle breathing down their neck. They can afford to wait, observe, and double down when it matters.

We’ve already seen examples of this shift at work. Several high-profile startups raised rounds in the last 18 months led or co-led by family offices — often quietly. In many of those cases, the family offices brought more than money: deep sector connections, operational experience, or access to adjacent business lines that helped the startups grow.

For venture capital firms, this shift might feel like a threat. But maybe it’s also an opportunity. Some of the most adaptive funds are already leaning in — co-investing with family offices, offering lower-fee or deal-by-deal access, or building out advisory arms to support in-house teams with diligence and pipeline. Others are still pretending the shift isn’t happening.

There are also tech opportunities emerging. Platforms that help family offices source vetted deals, manage portfolios, or streamline due diligence are gaining traction. Investors who understand these operational pain points have a real edge in building the next generation of tooling for private capital.

This isn’t about losing relevance. It’s about redefining it. If family offices continue moving upstream, the firms that stay in the game will be the ones that add value beyond capital: expertise, trust, and highly curated access.

If the smartest capital is now going direct — what does that mean for the future of venture?

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Germany has announced plans for a massive €100 billion fund aimed at boosting domestic industry, green energy, and tech innovation. The move is part of its strategy to compete globally in high-tech sectors and reduce dependence on foreign supply chains.

The Bank of England has cut interest rates for the first time in years, signalling a shift toward supporting growth amid slowing inflation. For startups, cheaper borrowing could open up short-term opportunities — but also hints at concerns about the UK economy.

New OECD data shows global corporate investment growth is stalling, with sluggish capital spending even in traditionally strong sectors. The slowdown could mean longer fundraising timelines and tougher competition for capital.

It’s now taking significantly longer for startups to move from Series A to Series C — in some cases over four years compared to under three pre-2020. This longer path to later-stage funding means more pressure on revenues and runway management.

The EU has launched a bold $30 billion strategy to build gigawatt-scale AI data centres powered by 100,000+ GPUs — all aimed at closing the AI infrastructure gap with the U.S. and China.

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