Direct Investment vs. Fund Allocation: Why Family Offices Choose Direct

The investment landscape is shifting. More U.S. family offices are choosing direct investment over traditional fund allocations, and for good reason.

The 2/20 Problem

Traditional venture capital funds charge:

• 2% management fee annually
• 20% carry on profits
• Long lockup periods (typically 10+ years)
• Limited transparency into underlying investments

For family offices managing their own capital, these fees can significantly erode returns over time.

Direct Investment Advantages

1. Fee Transparency

• No hidden fees
• No carry
• Pay only for the services you use
• Cancel anytime

2. Control and Flexibility

• Choose which deals to participate in
• Set your own investment criteria
• Move fast on opportunities