Family Offices Invest in Startups: PwC India Report

New Delhi, Jul 3 (PTI) Family offices are increasingly investing in startups, diversifying their portfolios, and seeking higher returns as they are shifting from traditional investments, a PwC India report said.

Currently, there are over 300 family offices in India, as against 45 such offices in 2018. The number is set to rise exponentially, with promoters building impressive businesses in Tier 2 and Tier 3 cities, the report titled 'Creating Holistic Value for Family Businesses' said.

Noting that the Indian economy is on a roll, the report said that contributing to its expansion are family businesses, both large conglomerates and small-to-medium-sized enterprises, spanning sectors such as manufacturing, retail, real estate, healthcare and finance.

"...family offices have catalysed the creation of jobs, entrepreneurship and a culture of self-reliance in the country, unlike those that have gone south owing to a lack of adaptability, succession planning, innovation, and effective governance," the PWC India report said.

The report details how family offices (FOs) have evolved from wealth preservation units to sophisticated entities driving impactful and responsible investing.

FOs are diversifying their portfolios, accessing global opportunities, and embracing a global citizenship mindset, a trend that reflects the dynamism and adaptability of their wealth management strategies in response to the evolving economic landscapes, it added.

Falguni Shah, partner and leader, Entrepreneurial and Private Business at PwC India said the rising influence of family offices highlights the evolving wealth management and financial advisory landscape in India.

"Over recent years, family offices have secured an integral spot in India's financial ecosystem, offering specialised services tailored to the unique needs of high-net-worth individuals and business families," Shah said.

Family offices, the report said, are increasingly investing in startups, diversifying their portfolios and seeking higher returns.

They are shifting from traditional investments to strategic risk mitigation and exploring opportunities in emerging markets.

"Among Indian family offices, fintech is a key attraction that raised a total funding of USD 853.6 million in CY23," it said, adding that Indian family offices are also setting up offices abroad to tap global investment opportunities.

One such Indian family office has made several strategic investments in the Indian startup ecosystem, seeking out promising startups with innovative business models and disruptive ideas.

Jayant Kumaar, partner, Deals and Family Office Leader at PwC India, commented that family offices in India are transforming wealth management by embracing technology, global diversification and ESG (environmental, social, and governance) principles.

"Their evolution from wealth preservation to impactful investing is crucial for sustainable growth and positive societal impact. Addressing trust, succession planning, and risk management will be key to their success," Kumaar said.

Family offices also face risks such as cybersecurity threats, regulatory compliance, and privacy concerns – making a robust risk management framework an imperative today, the report said.

Talent acquisition and retention pose another significant challenge, requiring family offices to offer competitive salaries, work flexibility, and a compelling value proposition to attract skilled professionals, the PwC India report said.