In the startup game, does it matter where the investment comes from?

Wall Street Journal reporter Gunjan Banerji recently wrote about how a growing number of wealthy Americans are launching family offices and are the new power players on Wall Street.

Family offices, that catch-all phrase you turn to when the venture capitalist tells you to drop dead, you’re too early, your annual recurring revenue is too low, and to quote one of the great jokes of yesteryear courtesy of Rodney Dangerfield, “you want a second opinion, OK, you’re ugly.”

Welcome to 2026. Just to put things in perspective, family offices manage $5.5 trillion in wealth, and there are 8,000 single-family offices globally, according to The Wall Street Journal article. What a startup founder might call a target-rich environment.

But, not so fast. They compete with private equity and large venture firms, so if you want a seed round of $500,000 to get started on an MVP (minimum viable product), they are not taking your call. Five hundred thousand is a rounding error for them.

“We get pitched a lot,” Vinod Gupta, with a family office of over $100 million, told The Wall Street Journal. “I bet I get three emails a day. Of course, I just delete them.”

So our founder goes to the next best thing – friends, families and fools. Again, not so fast.  A new study shows that taking money from friends and family is not such a good idea.

Brian Baik, professor at the Harvard Business School, conducted a study that points out that “family backed entrepreneurs had 53% fewer patents and 7% slower sales growth than those supported by professional investors.”  He goes on to point out that “family investors select ventures that take fewer risks.”  

Instead of the cold eye from Silicon Valley, the family investor is motivated in large part by altruism. The subtext here is that Uncle Harry is naïve and just wants to give Sally her chance at greatness. It’s true that the Thanksgiving dinner might be a bit awkward if the company is running on fumes, but the advice from Baik in the end is to treat family money the same as any investor.

Tell Harry that increased revenue and new markets are right around the corner, and please pass the mashed potatoes. 

This leads to researcher Brene Brown, professor at the University of Houston, who writes on the subject of values and vulnerability. Her theme is that exploring and integrating those two issues leads one to “greater purpose and determination.”   

If you combine those two characteristics, she tells the Knowledge of Wharton, a business journal from the Wharton School of the University of Pennsylvania, that it leads to the obvious intentional behavior of “playing to win versus playing not to lose.” In her mind, this is not optional; playing not to lose is always losing. Countless athletic coaches have sleepless nights (and maybe lost their jobs) because of a mismatch of purpose and determination.

I think it is easy to say play to win. Go for two. But in the startup game, I think where the investment comes from, where you are in your own economic world, what is the actual risk of a particular decision, all of these factors change the playing field. 

Sure, go big or go home. Put it all on red. Bet the farm. But if you end up working on someone else’s farm instead of owning a part of your farm, well, that’s an outcome that might realistically factor into the playing to win mantra.

I am occasionally asked for advice from a founder (there is no charge, so you get what you pay for). After a quick look at the product offering, my real effort and time is spent on understanding the back story. Why are you doing this, what is your history, what is the desired outcome, how realistic is that with this product, etc. Of course, at some point the issue of valuation comes up. The zombie apocalypse. How many “Shark Tank” deals don’t get done because the founder has an unrealistic opinion of their company, sometimes referred to as “my baby.”   

The new year comes with all kinds of possibilities. I remain an optimist. I love the stories when the little guy wins and slays the bully. I get verklempt at movies when the sun sets on them kissing at the ocean front. But on the subject of decision-making at difficult times in your company, I think I come down on the side of living to fight another day. I don’t want to go home — yet.

Rule No. 812: Pray for rain. Buy an umbrella.

Senturia is a serial entrepreneur who invests in startups. Please email ideas to neil@askturing.ai