Why We Said No: Lessons from the Investments Family Offices Didn’t Make | LSI Asia '25

Ivanny Franklin  0:06  
All right. Well, welcome everybody. We appreciate you being here. This is going to be a fun discussion. So what we're going to unpack today is focusing on family office investment strategies. So everybody up here on the stage has quite a different structure and thesis on how they're deploying, but everybody is involved with a family office. So what we're going to walk through are red and green flags of our diligence process, evaluating pitch decks, vehicles that we use to deploy through a family office. How that's unique, how it differs from VC, PE, what we're looking for in terms of diligence and how we're working together with teams to be able to deploy. I'll start by introducing how mine is structured, and then we'll kind of go through and you guys will get an idea of who we've got on the stage. And then I'll save a few minutes at the end for questions. So my name is Ivani Franklin. I started my family office in 2020, through the exit of NAMSA. My family office is called Med site capital. I typically deploy pre seed through a either through direct investment side cars or syndications via fund to fund, average check sizes for direct investment are between one and 250 k5, 100 to a million for SPVs and one to 3 million for fund to fund models. My thesis is focused strictly on med tech. I focus very heavily on cardiovascular, ortho, neuro and a bit in digital health. And I represent a single, single nuclear family, as well as about 20 other LPs that are friends of the family or ex NAMSA or people that are looking to get into the private equity, private investment space, and I'm remotely based in the United States. Omid, you want to go next?

Omid Akhavan  2:13  
Sure. Hi. Omid Akhavan, run a single family office based out of DC. We're pretty well diversified. We invest a lot in healthcare. We're very mission driven. We also do real estate, oil and gas technology, etc. Our typical check size, can you know it's as small as 100k but we'll write five to $10 million checks. Typically, we're looking at companies that are late clinical through commercial stage opportunities, and then mostly we look at medical devices in the healthcare space. We don't do any Biopharma.

Nicholas Drysdale  2:52  
Thanks a lot. Evany, congratulations LSI on another fantastic event. My name is Nick Drysdale. I am slightly different from the rest of the panelists. I don't represent my own family office, so perhaps I need to be nervous, as opposed to the rest of them. So I'm actually currently the CFO of two robotics businesses, both headquartered out of Houston, with R and D campuses in Seoul. Prior to taking on that role as the CFO, I worked with Crescent group. Crescent group is a single family run conglomerate of international businesses. It's got two halves of the business. There's Crescent petroleum, which is the legacy cash generative, energy related business, and crescent enterprises on the other half of business, which is everything else, including large operating businesses, positions as LP into funds as well as direct investing.

Tyler Wanke  3:52  
Hey everybody. I'm Tyler Wanke. I am one of the family members of Wanke family office, and I'm based in Chicago, Illinois, families based all over the states, and we invest in a number of things, including Life Sciences within that. We mostly do med tech, and we mostly do direct deals. We're typically coming in anywhere from the early phase, sort of pre seed, early deals, all the way to growth capital as needed. And we're typically writing anywhere from a low six figure check all the way to a million bucks per deal. We also have a few other families and other sides of the family that invest together and can write really large checks together. So that's one of the ways that we do it. And we just started to invest into funds as well as sort of fund funds alongside of it. So I also will help you know with the early stage companies and take leadership roles as CEO of our spin out companies, and I'm currently doing that for one of our companies now. Mad

Mark Wang  4:45  
sign, awesome. Good to be here. This is Mark Wang from Pure Land ventures, and I represent Singapore, I guess, out of the group. So we run dedicated health care funds spin off started from a single fund. Family office, and then became multi so we do healthcare, medical device, digital health services. We don't do really Biopharma as much. And then it's a global mandate. So pretty much 50% of the deals in the US, and 20, 30% in India and then Singapore and Europe. Used to say we don't really touch China, but that changed last year after we made a big investment in China. So then, in terms of space, we're quite open. From oncology is a big focus, brain health, and then women, children, we mostly focus on impact. And then respiratory and then through ophthalmology, got into diabetes. And then the typical check sizes are 350, to 1 Million USD in the earlier stage, and then we don't do too much in the middle. But then as the company grow, then we syndicate to do like three to 10 million. Yeah,

Ivanny Franklin  5:51  
thanks everybody. So I think first, how we maybe would be most valuable to begin is to talk about diligence process. So I'm just going to open this up to everybody to speak to. How are you managing deal flow? How are you getting access to deals? How are you moving through diligence? Are you doing that individually? Do you have teams? Maybe as well highlight what you're looking for, what you're not looking for.

Nicholas Drysdale  6:22  
So on behalf of Crescent group, who I'm no longer employed by, they it's a large business that has generated significant cash flow for the last 50 years on the energy related side of the business, on the investments arm slightly differently from other Middle East families, of which there are many that have deep pools of capital and also have significant exposure to venture capital as an asset class. Crescent group is slightly unique. It's always been pioneering in its spirit. And instead of only investing as LPs, which Crescent root do do, in addition, they have built a direct investing team. So that direct investing team is cross technology focus. It invests both directly through the relationships that are generated by those team members, as well as relationships and deal opportunities that are generated from Crescent's position as an LP in funds and the ability to co invest alongside some of those fund investments, I would say that the focus for Crescent is deeper Tech, whatever that means, and certainly more impactful and disruptive tech this part of the family office and of the investment portfolio is seen as the high risk element, so it's purposefully there to take longer term, possibly even bigger bets where the opportunity is more significant, coupled with that, med tech and health tech, more generally, fits very nicely from a from a family office perspective, given that there's philanthropic angle to the investing approach as well

Tyler Wanke  8:17  
anyone else in terms of like deal flow and diligence, you know, we're not a huge shop ourselves, so we do what we can, I think, for formation, early stage capital, sometimes we'll do a ton of diligence and help decide whether we're going to spin a business out of, say, a university. So typically, with that, we'll get our hands dirty. We'll do a ton of work. We may even help set the terms for that initial pre seed, or seed round of spinning out that company. That's an area that we get our hands again, really dirty for some of these later deals. A lot of times, we're working with other family offices or venture investors to help diligence companies, and we're relying on each other's diligence to make it happen, just because we're not super large ourselves. So we wouldn't set the terms, for example, for a Series A or Series B, or anything like that. But we will work with some larger family offices, VCs, and follow their lead once getting to know them a little bit and in terms of deal flow, that's how we get a lot of our deal flow. We don't have a big public presence because we also can't handle a ton of deal flow. So a lot of it's from, you know, trusted venture investors, other investors where, you know, we'll hear about deals, or at conferences like this, I

Mark Wang  9:25  
think I'll go next. So I think, as a family office, luckily, we don't need to fundraise. So then we spend all the time really operating and try to work with the company. So we're quite hands on player. So sometimes, like 200 hours per company per year, helping all the way from manufacturing to like strategy, like, we bring the Singapore company to the US, and then US company to to Asia. So as a result, like, we were more like patients capital when we decided to set this up, right from LPS perspective, they really want to, they do health care because they want to save lives. So we have a man days, and we have a goal to have. 100 million people through what we do, that's kind of what we measure, besides the returns, right? And then, because of that, I often tell the company, before I put in the money, is your problem, and once I put in the money become my problem. I need to like you so much that willing to do that. So in terms of deal flow, we go through about it. So we have a dedicated team that's separated from the main family offices to run this and then report to the family office. So we go through about 300 to 500 deals a year now, and then cross like different family offices, VCs, advisors across different locations and continents. And then when you spend 100 200 hours a year on a company, usually the CEO really appreciate so then they become your individual experts on certain field, right? For example, our one of our best company in the radiotherapy space, they probably know all the company in the space. And then when we come across a company, then they become our point of contacts for the due diligence. And then, unlike the Vc, Vc like, we're not really rushing as much, so the DD process can take a bit longer. So in the earlier days, when we first started, I would say, sometimes we rush into those ideas, but now, after spending so many times growing the company, then we really try to work with the founders, try to see the character, if the person is good enough to bring it to success. And then we study the market, especially the commercial right? A lot of times in the earlier stage, when, when the founder built a company, they haven't thought too much post FDA or post regulatory so those are some of the things we spend a lot of time trying to figure out before putting in the money. And then sometimes, when the DD last four and five, four to five months, then you see what the milestone they promise, can they really deliver? So yeah,

Omid Akhavan  11:55  
yeah. I think, I mean, we have a similar source of deal flow. We get a lot of deal flow from other funds in the healthcare space. LSI has been a great source for us. You know, both meeting companies, watching presentations. We also we look at deals with other family offices. I think for us, our diligence process, it depends, I think, on the space. If we're syndicating with another fund. Often we'll rely on that fund's diligence will lead deals. We'll follow deals. I've spent my entire career in healthcare, so on med tech deals. Pick up the phone call the KOLs. Do standard diligence. Call 10 to 20 KOLs. Look at the unmet clinical need. Look at reimbursement, look at the regulatory landscape. Given we're slightly later stage investor, a lot of the technology has been complete, and you've done first in human so from a diligence perspective, it's really focusing on what is the commercial story? How do you think about reimbursement, and then where we try to add value, you know, if we're leading a deal, we'll definitely take a board seat. If we're following we may take a board observership. But where we try to add value is through relationships. So whether it's capital relationships with other funds, with hospital systems, with key opinion leaders and really get in the nitty gritty. And for me personally, I had one portfolio company where I've stepped in as CEO, and I'm running the company while managing the family office. So as I look at my bandwidth for deals in the last year and a half, I think I've definitely relied more on syndicate partners. And actually, a lot of my deals come from clinicians, where they're a medical advisor to a company they're very excited about something. And so there's a deal I led last year where, you know, I priced the round, joined the board. We got FDA clearance at the end of last year, and we've been commercializing the last six months, so

Ivanny Franklin  14:02  
that's good, but let's talk about red flags next. So you know when you guys are evaluating deal, flow, pitch decks, etc, what's an immediate turn off, and maybe a green flag, what's an immediate turn on? I'll use my family office as an example. I typically am investing kind of in that seed, maybe a range, so I'm really pressure testing clinical evidence and data as well as regulatory strategy and reimbursement coding. So if that is not clearly defined in the pitch deck, it's an immediate red flag out for me. So I want to see all of the pre clinical data, the clinical study design, if you have first in human data, if you're entering into your RCT or your pivotal trial. I need to see that, because that's going to impact time and cost to market. And I know exactly you know. Based on the therapeutic area, how long that takes and how much it costs, and I want to be confident that the founding team also understands that. That's going to drive all of the fundraising decisions as well. Regulatory strategy super important. I've had several pitch decks that have claimed 510, K pathway, and I guess based on my background or expertise, I know that's going to be a PMA. So I want to have that substantiated. The regulatory pathway and the associated clinical evidence can be on the scale of millions in years. So it's a huge red flag for me if the founding team has not establish that. I've also seen pitch decks where reimbursement codes are suggested. Many of my LPs are either care wells X FDA or experts in the industry. So I'll float those pitch decks through those SMEs. I had one that identified and said these codes, these reimbursement codes in this pitch deck are not even in existence. And so the these, I think the a big purpose of the panel is to talk about, like, you know, red flags immediately, those three areas for at least my family office, that's what is driving a lot of our investment making decisions, and certainly our strategy. So I know, for you guys, you know, maybe in the med tech vertical, what are some of the red flags that you or your investing teams are looking at?

Omid Akhavan  16:31  
So I'll go, I think, for me, as I think about the world of Medtech, we hear about these big exits, 500 million, billion dollar exits. The, you know, the data shows the average med tech deal happens at under $100 million exit M and a valuation. And so for me, a lot of what I look for is capital efficiency is, how can you, you know, working backwards, right, doing the venture math is, how can I get a three to 5x return in a reasonable period of time, and assuming that, you know the exit will be somewhere between 100 and 100 50 million. I mean, it's all space dependent and stage dependent, but you know, how do you work backwards to generate a return? And then thinking about the budget and the plan, and so if, if you're running a 510, K and it's going to cost you $20 million to go do your pivotal study, but the market is only a few 100 million dollars, and your exit is capped at a few 100 million dollars, then how do you really generate a return? And so I think I always, I always start with valuation, and then ultimately the budget, and thinking about, you know, dollars to milestones, and that's been, it's actually helped us a lot.

Nicholas Drysdale  17:53  
Yeah, that's very interesting from, you know, I think that I'm sure there's success stories out there where venture firms have proven patient supportive capital, but they're driven by metrics. I think family offices really do offer that quality to to the companies that they end up partnering with, and it's semi unique in that, and it's in it's a committed relationship to that end, I think for for us, given that we are or Crescent is cross sector, it doesn't have deep expertise into med tech, like some of the panelists here, and certainly like you would know your own businesses in the room, so I would say that what the family offices probably do have, and certainly Crescent has is access to very high quality experts before making that investment decision, and that will always be part of the diligence process, particularly if you're committing significant capital and wanting to join that company on a journey For a period of time, and therefore that initial impression, there's always a tendency, and there's a need to sell your business, but to be very careful not to in any way cause any confusion or misleading information that then is run with. Because I truly believe I've seen deals fall over fairly late on where something communicated fairly early isn't right on the money, and it just causes that relationship to feel slightly different. So I think that asset, or sorry, that that funding stream from family offices, offers something very special to companies. It needs to be treated with, with that with that approach, right from the word

Ivanny Franklin  19:39  
go, and before we go to Tyler and Mark, what specifically are you guys looking for? Then, is it, are you evaluating IP commercialization strategies, exit strategies, clinical evidence? What? How you know, kind of with you having cross vertical folks helping. You evaluate, what are you guys specifically looking for? So,

Nicholas Drysdale  20:04  
similar to, as I mentioned before, something with significant disruption and impact potential, we're willing to take or Crescent are willing to take significant risk in that position, but do not want to necessarily back a valve or a widget unless it's super impactful. So for instance, the two significant investments that they have made are robotic surgical platforms, which are long journeys, significantly capital intensive, but have the opportunity to on one of the businesses in endoquest Robotics. It's the next generation of scholar surgery. So alongside Dr Fred Moll, who's the founder of intuitive and that relationship is at the family level with Dr Fred Moll for endoquest, it's performing proper surgical techniques in the GI tract and the running room in the GI suite that that offers on the X Cath, which is another significant investment. It's Endovascular robotics. So again, a capital intensive industry, the the vision, and there's a number of businesses in that space chasing that opportunity is remote mechanical thrombectomy. So taking what is a near miracle treatment that has only been around for 10 years, and the treatment of stroke, being able to deploy that onto the outer reaches of your healthcare systems that are currently relying on very inefficient Hub and Spoke models and not having the ability to deploy very expensive intervention lists or to or to support more rural areas. So I think impact and significant financial societal returns are important.

Mark Wang  21:46  
Because Great point. Yeah, I want to make one point is, a lot of times we meet founders who think family offices are easier to get money than VCs, but I think for the most of the panelists sitting here, I think really deep into the expertise if, if a family office are dedicated in health care like the chances are it's not easier, sometimes even harder, because we don't have deployment pressure, right? We don't have to deploy the whole fund in five years and then, so if we're not comfortable about something, we'll keep digging until, until we're happy, right? So, and some of the points like, we make a rule of 30 person technology problems, 70% people into our rubrics. Because often we because we're acquired, we invest international so often, like when we see a technology, then what we do is we go through all the key markets, from us to Japan, to China, trying to bring together all the competition, because nowadays, I think it's quite global. And then company cross sells across different continents. So if in a key market such as us or Japan that can that the company's business model or unit economics is not going to work, and then they say, I have plans for like five different countries in the first two years, then the often like chances they're not going to hit any of them, because it takes so much time to open a new market and then resources, and it takes away execution and time and efforts, right? So in the earlier days, like, I definitely think we were a bit more into technologies, and then we do realize, like, as the technology get regulatory, then if you're not really understand your market and to have a realistic plan, then you spend multiple years trying to redo the business model. Then if you burn all the money, and then that's when the valuation and everything becomes becomes problem. So which is why, now, even for the earlier stage, we try to given work. We're quite new in cardiovascular I think that's a bit different, right in the typical medical devices, where commercial are important. So we spend a lot of focus on that, and then we try to evaluate, let's say, breast cancer, AI. Then we were helping one of the hospital trying to identify technology. Then we identified, like 26 AI company doing breast cancer globally, right? And then when the competition is so high, then you really, you cannot just limit in a small country or small market, say, Oh, I'm going to make a good business, and then I'll go to the US, right? A lot of Asia companies say, I'm going to the I'm going to go to the US, but then they really don't have the plan, right, or their plan is not really realistic once you talk to the US experts and the US hospitals. So I think most of the time the projections are are not met. So we spend a lot of time really trying to dig into the code, and how complicated does it take for the hospital procurements to actually take it and all those things so and the red flags, I think, besides the projection, and I think it's really the CEO needs to know the space right, because often, once all the family offices start to dig then. If the if we realize what they're projecting and what they're saying is really far away from the truth, then that, then we question the capability, or what do we really know your space and everything. So it's not easy to run a med tech company. I

Tyler Wanke  25:15  
think one thing too, other than a lot of the quantitative metrics and looking at the numbers is definitely like looking at the people, whether we're investing in, you know, the company, or potentially a fund. Like a big part about it is, who are we dealing with? As most people in here know, these ventures are a lot of work. They can take a long time, and it's easy when everything's going well at a company. Board meetings are fine. But when you're going through a tough time with a company, and, you know, I think we've all had companies that have been near death a couple of times have not died, you want to make sure that the people you're doing with it, whether it's the management team or your co investors, are the type of people that you want to, you know, be in that situation with people of with high integrity, people that are honest, people that are willing to be persistent and not give up and help get through a tough time, if possible. It's so on and so forth. So that's a big part of what we look for as well. You've probably heard the saying, you know, a B team with an or rather an A team with a B idea, beat, say, B team with an A idea. To some extent, we believe that, and we're always looking for teams, be it management teams or investor teams, to do business with, because it's just makes it a lot more likely that you're going to be able to get through tough times with those people.

Ivanny Franklin  26:31  
And I just thought of one more red flag. I see a lot of cool technologies, you know, in the pitch deck, where, you know, the novel device, or the tech can pursue multiple indications. We really want to see, at least in my perspective focus. So I see a lot of times, almost over inflated pitch decks where, you know, the device, or the technology can do this, this, this and this, or, you know, to Marc's point, you know, pursuit of multiple markets. I want to super clearly define strategy on what indication and intended use are you prioritizing? The entire pitch deck should be built upon that. So I recognize that there is value in scalability and pursuit of subsequent indications. But for me, it's, it is a red flag. If the initial strategy, market sizing, regulatory pathway, and again, clinical evidence associated with that is not really clearly defined, then I almost get the impression that there's lack of focus in the in the strategy as well. So kind of next question, I know we only have a couple minutes here. I want to talk about vehicles for family offices. I think that's also a little bit unique. So whether that's side cars, SPVs, fund to fund, direct investment, can you guys just really quickly run through, um, how you typically structure those deals, and how that impacts your diligence, decision making. And I think you each have 30 seconds go,

Omid Akhavan  28:09  
right? So, I mean, we do typically, we will create an entity, because we have multiple members of the family that will invest out of different trust, different vehicles, individuals. So we'll create one LLC that will invest into the company and continue to support it. When we subscribe to a fund as a limited partner, usually each of those entities will subscribe individually. So it really depends.

Nicholas Drysdale  28:38  
Yes, Crescent is a multi billion dollar family owned asset base. So it's got everything from full operating businesses that are cash significantly cash generative, all the way through to its LP positions, its direct investing team, which co invests alongside the LP positions. What we don't have is anyone else else's money, other than the family money, it's actually one shareholder, and it's, that's the simple structure. Yeah,

Tyler Wanke  29:05  
we've done it a couple ways. We have multiple ways of doing it from within the family, to do direct investments. But we've also done big SPVs with other families and high net worths and pulled together big amounts, you know, with whatever, no fees, no carry, just to pull together big, numbers as well. So we've done it different ways.

Mark Wang  29:22  
Yeah, like everyone, we created a fund, and then so put the all the lps together. There's four LPS in the in the funds. And then we do direct investment, either leading or follow. And then, because some of the doctors and other family offices co invest with us. So then sometimes we do put together SPVs, and then in those cases, we don't really charge, charge, carry and everything is just a vehicle to bring everyone together,

Ivanny Franklin  29:46  
right? And I think in that capacity, family offices can be quite nimble. So for example, me deny or Tyler and I will pool together x amount and deploy that as a single entity to keep the cap table clean and. Into. So it's almost like a direct investment, but a sidecar and SPV, where we're not charging each other fees and carry we're just using that SPV as a vehicle to be able to deploy and to meet whatever the minimum buy in is for that round. So I think family offices can be quite collaborative and nimble in that capacity. And oftentimes small. There might be two of us, four of us, sometimes I might do upwards of 10. But so I know we're at time. We're going to be in the back, if anyone would like to connect, and if you have questions, and I just want to say we appreciate everything you guys are doing for science and people. Thank you for being here, and we appreciate the opportunity.