The New Math of Family Office Investing

For wealthy families that manage their own capital through a family office, the investment calculus has become strikingly simple in today’s market. As Djoann Fal, a family office advisor and investor at Atlas Capital in San Francisco, explains, a long‑term green energy project might promise a three‑times return over three years, whereas an AI‑focused opportunity could deliver the same three‑times return in just three months. When faced with such a choice, the decision is obvious: they gravitate toward the AI deal that can triple their money in a single quarter.

Why AI Is the Magnet for Family Office Capital

The current frenzy around artificial intelligence—soaring valuations, aggressive pricing, and the promise of outsized returns—has made AI irresistible to family offices. Beyond the allure of high returns, a deeper shift is underway: many families are bypassing traditional venture‑capital fund structures. Instead of committing capital to blind‑pool funds where they have no say over the underlying companies, they are purchasing existing shares from current shareholders or negotiating direct deals. This approach grants them exposure to the hottest AI firms without surrendering control of their capital to a fund manager for a decade.

More Dry Powder, More Appetite for Risk

Fal notes that family offices now possess ample “dry powder” to chase single‑name deals, opting out of the conventional blind‑pool model. A new generation of family offices is emerging, exhibiting a higher tolerance for risk than their predecessors. “Right now, the single names they want are the AI leaders,” he says. The sheer scale of wealth under management underscores the firepower available: according to a Deloitte report from 2024, family offices oversaw $5.5 trillion in assets, a figure projected to climb to at least $9.5 trillion by 2030.

Data Points Showing the Shift Toward Alternatives

Supporting Fal’s observations, UBS’s 2026 Global Family Office Report surveyed 307 family offices worldwide, each with an average net worth of $2.7 billion. The study found that alternative investments—encompassing private equity, venture capital, and private credit—now constitute 42% of the average family office portfolio. Historical context reveals that this is not the first surge in direct investing. Direct deal activity rose steadily through the late 2010s, spiked in 2021 when direct deals represented 13% of the average portfolio (up from 9% in 2019), and total family office deal volume peaked that year at 17,460 deals worth roughly $1.05 trillion, per PwC’s Global Family Office Deals Study. However, rising interest rates and disappointing returns triggered a swift retreat; direct and M&A deal activity fell by 53% over the following 18 months, and by the first half of 2025 overall deal volume had sunk to its lowest point in a decade.

The Market Is Bouncing Back—But Differently

Today, activity is rebounding, yet the pattern has changed. Family offices are writing larger checks on fewer deals, with much of the action occurring in the secondary market. Fal describes the secondary market as the most “de‑risked” segment of venture capital today, because investors are backing companies that already demonstrate customer traction and revenue. Angelina Hu, head of investor relations at Bridge Funding Global, adds that this route lets family offices gain exposure to a private company without having to spread their capital across 20‑30 different firms. Bruce K. Lee, founder of Keebeck Wealth Management, captures the sentiment: “Family offices see the risk, but don’t want to miss the opportunity.”

Real‑World Examples of the AI Rush

The trend is translating directly into Fal’s own business. He reports raising more capital than ever before, all earmarked for “AI things,” while clients not focused on AI are struggling to attract funds. Family offices are reportedly willing to pay “primary‑style prices” for “secondary‑stage risk,” accepting thin margins for outsized upside. Fal illustrates this with a personal anecdote: over the summer he fielded interest from clients looking to invest $50 million to $100 million into Anthropic via the secondary market. Anthropic stakes, alongside those of OpenAI, are among the most coveted assets in venture capital—described by Emily Zheng, a senior VC analyst at PitchBook, as some of the “most contested real estate in venture.” Even advisors whose mandates exclude AI are being pulled into these transactions, reflecting where limited‑partner demand currently resides.

Balancing Optimism with Caution

Despite the enthusiasm, family offices are not blind to risks. A February report from J.P. Morgan Private Bank revealed that 65% of global family offices plan to “prioritize AI investments” despite concerns over inflated valuations and pricing. Maximilian Kunkel, chief investment officer of global family and institutional wealth at UBS Global Wealth Management, notes that these decisions are made against a backdrop of geopolitical tensions, rising global debt, recession risk, and broader market uncertainty. Yet family offices see AI as one of the most powerful long‑term growth opportunities, allowing them to pursue growth while diversifying across regions, currencies, and asset classes to mitigate concentration and macroeconomic risks.

The Lingering Question: Is the AI Boom Sustainable?

The ultimate uncertainty remains whether the AI surge represents a durable transformation or a speculative bubble. If the bubble bursts, the fallout would not be confined to AI stocks alone. As Bruce K. Lee warns, “everybody knows that if it goes under, the stock market’s going to have issues.” He observes two camps of investors: those on the sidelines labeling AI a bubble while owning none, and those who are anxious yet effectively all‑in. Some of his clients admit AI might be a bubble but balk at discussing hedges, confessing a collective addiction to returns. “We’re all addicted to returns,” Lee says. “That’s the sugar.”