Family offices cut direct exposure to startups, call in micro VCs

DIRECT STARTUP INVESTMENTS by family offices moderated in 2025, even as overall interest in early-stage venture opportunities remained intact, with a growing share of capital being channelled through micro venture capital (VC) funds.

- AYANTI BERA

This year family offices invested just over $1 billion across 61 deals in startups less than 10 years old, according to data from Venture Intelligence. This marked a decline from $1.3 billion invested across 78 deals in 2024. The softer headline numbers reflect not a retreat from venture investing, but a recalibration of how family offices assess early-stage risk.

The slowdown in direct investments has been driven by a reassessment of the operational and governance challenges involved in backing startups independently. Many families that actively wrote early-stage cheques over the past few years have found portfolio construction, follow-on funding, dilution management and governance oversight more complex and time-consuming than anticipated. As a result, capital that would earlier have gone into direct startup deals is increasingly being allocated to professionally managed micro VC and early-stage funds.