Family office spin-outs: a new breed of VC

Blending Principal Mindset with Agent Rigor

Venture capital’s roots, and the unique role private wealth plays, are most clearly understood by tracing the evolution of “alternative assets” across centuries. In the 18th century, short-term merchant credit was the original alternative asset. This innovation, referenced in Tom Nicholas’s VC: An American History, offered families higher yield and risk than traditional holdings, underwriting bold commercial and political ventures of their time.

Primer: The Evolution of Alternatives

• 18th Century Alternatives: Merchant lending and private notes, exemplified by Robert Morris and the Bank of North America, allowed families and traders to finance trade, expeditions, and enterprises outside public markets. This marked the earliest “alternative asset” class in America, where private wealth enabled innovation and national development.

• 19th & 20th Centuries: The growth of industrialization saw alternatives shift to railroad bonds, private industrial finance, and direct equity stakes in transformative ventures.

• Modern Alternatives: Today, the alternatives spectrum includes PE, VC, hedge funds, credit, infrastructure, and emerging niches like crypto or impact investments, each reflecting shifts in technology and investor appetite.

Family Offices: Shaping and Creating Niches

Family offices have always been nimble adopters—and even architects—of frontier opportunities. Their principal mindset, deploying personal wealth rather than outside capital, empowers them to move quickly, support contrarian ideas, and create new markets. Just as Robert Morris channeled family and merchant capital into nation-building ventures, modern family offices continually seek new edges within the expanding universe of alternatives.

Principal vs. Agency Mindset

The distinction between principal and agency mindsets is foundational. Family offices act as principal investors—deploying their own assets, with a focus on mission, wealth preservation, and generational stewardship. Institutional VC, by contrast, operates as agent, investing on behalf of third-party capital—prioritizing fund cycles, scale, and short-term performance metrics.

Stewardship vs. Performance

Stewardship underpins many family office strategies, aligning investment with values, generational continuity, and education. Performance-driven models, prevalent among institutional VCs, deliver speed and scale but may favor immediate exit options over broader impact or legacy.

Always a New Frontier

History shows that alternatives are in constant flux: short-term credit gave way to industrial finance, then to private equity and VC, and now to digital assets and new frontiers. Family offices, given their independence and multi-generational focus, remain ideally positioned to discover the next wave of alternative investments.

Blending Principal Mindset with Agent Rigor: A New Breed of VC

Increasingly, I’m observing—and fortunate to support—a growing niche of family office spinouts and venture funds that blend the best of both worlds. These initiatives are led by families and principals who retain the values, flexibility, and conviction of the principal mindset, but hold themselves to the disciplined standards, transparency, and accountability usually found in agency-driven firms. This hybrid approach results in funds and allocators that can invest with purpose and agility, yet benchmark themselves against the highest performance criteria.

Furthermore, next-generation principals and capital have become more ambitious, taking a keen interest in VC as allocators or as champions of new models. They’re forging collaborative platforms, spearheading innovation, and redefining what it means to steward capital for both impact and returns. As these trailblazers enter the venture space with both conviction and professional rigor, I believe they are shaping the future of alternatives, building a culture that truly marries legacy and leadership with results and reputation.

UPDATE: Historical Roots and Modern Shifts in Human Capital

An astute reader pointed out that iconic VC firms such as Bessemer and Venrock were originally backed by family offices, highlighting that this “new breed” of VC spin-out actually has a storied legacy stretching back several generations. Bessemer traces its roots to the Phipps family office, managing assets after the sale of Carnegie Steel, while Venrock was explicitly formed as the venture arm of the Rockefeller family, building on decades of direct investment activity by the family itself.​

Historically, family offices acted as both capital providers and architects of early alternative asset markets, but the human capital was often professionalized externally. What’s notably different in this cycle is the rise of family office spin-outs and funds where next-generation family members themselves are actively leading, investing, and building VC platforms. This direct participation of principal talent alongside principal capital creates a powerful mix: combining generational values, deeper alignment, and fresh entrepreneurial drive as family offices transition from passive capital allocators to active shapers of the venture ecosystem.​

More recent data and trends confirm that next-gen family office principals increasingly view themselves not only as stewards but as ambitious participants and innovators—allocating capital, building collaborative platforms, and embedding their own talent into venture initiatives and emerging funds. This mirrors, and in many ways advances, the legacy families have had in venture investing since the industry’s earliest days, but with a modern twist: human and financial capital coming together within the family office continuum, fueling the next wave of impact and performance in alternatives.​

This is an educational post about GEX Ventures investments. It is for informational purposes only and may not be relied on as legal, tax, securities or investment advice and does not constitute an offer to buy or sell interest in any products offered by us or others. Email me at mk@gex.vc or leave a comment if you’d like to exchange ideas.