At present, thousands of venture-stage and growth capital company investment memoranda are in market circulation. Family offices in particular are continually inundated with requests for consideration both directly from companies and from the myriad advisers and promoters who seek to raise capital on a company’s behalf. Family offices have a well deserved reputation for being long-term investors willing to get involved much earlier than lumbering institutions. Nevertheless, the vast majority of these proposals are unsolicited and many go entirely unread; simply the by-product of too many impersonal scattergun approaches.
Research conducted by GPFO reveals that for an overwhelming proportion of family offices the main source of direct investment opportunities which are actually given consideration is other families. Moreover, when a family encounters a proposition which falls beyond its areas of in-house expertise most will seek to consult with other family offices. This tendency to share opportunities, opinions and diligence among peers is what has led to the creation of so many close-knit investment circles and syndicates within the family office sector. It is also the reason why so many corporate financiers have struggled to make headway in the space.
Now GPFO and our key strategic partners are launching a family office focused, direct investment hub, GTS Investment Network. This community will be based around an online platform, which will enable us to securely provide extensive and standardised due diligence pre-investment, regular reporting post-investment, facilitate the direct communication of our members both with each other and with the companies offered for investment. We hope to foster as much interaction between our members as possible and also to enable families to put forward their own opportunities for others to analyse via the GTS hub.
This builds directly upon the Private Investment Club (PIC) foundations, but GTS provides the infrastructure to share a far greater volume of deal flow while simultaneously conducting much more detailed diligence on the opportunities presented (thanks to our partners) and offering these to our members in a vastly more efficient manner. We aim to harness the multiple resources of the GPFO network – sector operating expertise, direct investment experience, networks and capital – to provide the direct investment service our research clearly shows is demanded by our family offices.
Our Partnership
In this venture we have taken on two strategic partners: seasoned investors with extensive operating, investment and execution experience across the stages of direct private equity investment. Their role is to assess the huge number of opportunities presented to us and to conduct the detailed diligence on those deals that meet our initial screening standards. For those companies which pass the second, far more granular, round of due diligence we would begin to share high level information among our network to test for preliminary interest whilst our partners continue to meet and evaluate the underlying team, management and business proposition.
Only after these months of assessment and review of the opportunity, and only if there has been a sufficient level of expressed interest from the network during those early stage releases of information, will full detail be released onto the GTS platform. This will include the investment note, full financials, all due diligence reports, term sheets and other relevant documentation all in our standardised format. We do not seek to recommend investments, but to select and curate those opportunities which we feel will be worthy of your consideration and to provide extensive documentation to support our work.
At time of writing we are putting the finishing visual touches to the beta format of the GTS platform which, while likely to evolve as we operate, is already fully functional and ready for users to begin. The very first pair of companies scheduled to appear on the platform have reached full agreement with our partners and we are preparing the last of their documentation. In the coming weeks we will be onboarding our initial tranche of member users; those from our community who have aided us in our market research, sourcing of deal opportunities or otherwise expressed an interest in taking part. To which end members can expect to hear from us as we begin to screen for preliminary interest in the first few of our selected companies.
Our first deal is a company that is bringing peer-to-peer short-term accommodation to the high-end of the hospitality market. They are addressing the fundamental weaknesses that platforms like Airbnb simply cannot address: inconsistent quality and service, as the vast majority of hosts cannot provide the quality of home or service that is required to meet the needs and desires of high-value guests. New capital will be used to expand existing operations in London and then to launch in other cities. The strong management team is led by a founder / CEO who was previously responsible for maintaining 12,000 Shell owned petrol stations globally. Break-even will be in early 2019. We are also in the final stages of due diligence on companies operating in the real estate and healthcare sectors.
We are hugely excited to be making this next step and look forward to soon welcoming all of our members to be part of the GTS network; whether it be to review opportunities, present something for our review or simply out of morbid curiosity.
Richard Fulton is the founder of Tyrian Capital and member of GPFO’s Advisory Board
Hamish Fair is Head of Business Development at GPFO
