We talk to a firm that helps family offices gain access to promising startups and similar investments. Among its most promising areas, it says, is the intersection of UK and Indian economic activity. The prospects of a trade deal between the countries is a fresh impetus.

India’s business links to the UK are in the limelight. Disruptions to global supply chains linking China to the West play to India’s strength as an alternative supplier. 

The UK wants to build trade relationships after Brexit. And all the while, India’s family-owned business traditions make that country fertile soil for family offices. 

Family offices know that India’s youthful demographics, IT savvy, rising affluent middle class and international connections make an attractive business proposition, even more so under the Najendra Modi administration that has sought to shake up the economy. The hard part is obtaining access. 

This is where a firm such as JPIN, a 12-year-old startup investment banking platform, sees itself playing a role. Gaurav Singh, based in London, founded the firm because he saw a need to help investors such as family offices get a seat at the table. The platform connects entrepreneurs between India and the UK, but that’s not the sole focus of its business. 

“Many family offices want to be in the top 10 of firms in India, Latin America and the rest of the world,” he told this news service. 

The India-UK nexus is a big area. The countries are in free talks, although specific timings have been thrown into some doubt given that Boris Johnson has been ousted as UK prime minister. (The Conservative Party is in the process of choosing a new leader. Ironically, one of its candidates, former finance minister Rishi Sunak, is of Indian descent and his wife is an India citizen.)

“The importance of the UK-India commercial relationship cannot be understated – it is currently worth £24 billion ($29.3 billion) in terms of trade and is projected to double by 2030 with the Free Trade Agreement, which holds huge potential for the increased collaboration between both countries,” Singh said. 

“Not only that, but India is one of the leading countries in terms of tech. It’s dubbed as Asia’s ‘Silicon Valley’ for good reason – its dynamic population and appetite for innovation makes it the perfect breeding ground for high-growth unicorns and decacorns,” he continued. “This comes at a time when the UK is experiencing a severe skills drought in the tech sector, and could benefit significantly from the huge pool of talent that India has. The UK and India have always had a strong historical partnership and, going forward, it looks like this will continue – especially in the post-Brexit era, which has highlighted the importance of international strategic cooperation.”

Singh is upbeat. In 2021, the organisation closed 40 investments. 

Large and very large
And JPIN has a particular approach to the sort of startups and young firms it likes and avoids. Singh prefers “decacorns” to “unicorns.” The former is a startup company valued at more than $10 billion (a unicorn is valued at $1.0 billion or more).

The reason for this focus is that there is less potential for failure. Decacorns tend to be more geographically diverse, hence they are likely to have more robust earnings, Singh continued. 

JPIN is more interested in emerging markets where opportunities for growth are less saturated.
 

Family office focus
“Our core focus is on family offices…We like them because they make decisions quickly and based on trust. They are driven by uplifting audiences and they are keen to build up the societies they came from. Those families are looking for long-term revenue streams for themselves. They also make direct investments.” (This news service is exclusive media partner to Highworth Research, a UK-based database tracking single-family offices, including those in India. Click here to register for its database.)

Singh notes that many family offices are still heavy with cash and have a traditional mindset on asset allocation. 

“VC investments face various perception barriers such as that on risks and returns. Another challenge is sourcing/access to promising deals. Even if they do manage access, evaluating deals is a huge task. For this, family offices typically rely on wealth managers, their small-scaled in-house expertise and CIOs too,” he said.  

Back to India, Singh sees the family offices segment there as attractive.

“The Indian family office market is growing. While the current numbers maybe around 200 plus, it’s interesting to note that many ultra-high net worth individuals are on their way to setting up a family office. Mergers and acquisitions, consolidations, stake sales etc are also birthing wealthy individuals/families who would eventually add to the growing number of family offices in India. So yes, there’s a huge opportunity in this landscape,” he said. 

“The next generation of wealth holders will be driving family office investments tomorrow and they are very much inclined to VC investments,” Singh said.

JPIN’s revenue model is that it charges a carry on the profits realised by the investor.

This news service asked Singh if he thinks family offices are becoming more willing to become more public in their profiles so that they attract deal flow and get invited to take part in deals? 

“It’s a mix of both. They are going public within their network of peers; however, their investment interests remain private in the eyes of the world,” he replied. 

“As mentioned above, family offices make investments quickly but provided there’s trust in the transaction/deal recommendation. It is key for them to invest in ethical and sustainable businesses built on good values and ethos,” Singh said. 

Family offices need guidance to avoid making mistakes on asset classes such as venture capital, he said. 

“One of the first mistakes that’s often made by family offices is not leaning enough on the support of external advisors – often holding meetings without them present. It’s crucial to enlist the expert help of people that have been through these type of transactions before and, in this way, it avoids costly mistakes being made down the line. The lack of communication between family offices and advisors can sometimes hinder the progress of raising funds – a clear and co-ordinated operating model is vital to drive an effective and valuable deal and will make the entire transaction swifter,” he said. 

“In addition to this, family offices generally handle a large amount of capital and so, for those operating multiple accounts across various financial institutions, it could potentially make it more difficult to consolidate their cash holdings. From our experience, family offices benefit hugely from putting a system in place that allows for a more direct view of all their investment activity, including trades, dividends, income, payments and transfers,” Singh added.