Why Family Offices Are Bullish On AI and Crypto
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According to a slew of news reports, family offices — private wealth management firms specializing in serving high-net-worth investors — are not only investing heavily in artificial intelligence (AI) and blockchain technology, but many are incorporating these cutting-edge technologies into their practices to improve efficiencies.
In February, Barrons reported that, “AI technology is expected soon to facilitate automation of several mundane but critical tasks for family offices …Chief among these mundane tasks is the mountain of paperwork associated with alternative investments, such as real estate, private equity, and venture capital.”
Barrons quotes one Chicago-based family office exec who says he foresees a day in the near future when tedious manual processes — such as completing 1,000-page IRS documents for clients — will be “completely automated” thanks to AI.
Others share his enthusiasm and not just for the sake of efficiency; they believe AI represents an important investment opportunity.
Take Jeff Bezos, for example. According to CNBC, Bezos recently invested hundreds of millions of dollars into AI and has made it the primary focus of his own family office venture, Bezos Expeditions. Other family offices are following suit. CNBC says that AI is now a favored investment category for more than three-fourths of family offices, with about 78 percent of them saying they plan to invest in AI during the next three years.
A 2024 study from BNY Wealth Management, “Enhancing Family Wealth” — which is based on a survey of 189 family offices worldwide — draws similar conclusions. It found that nearly 80 percent of respondents “see AI as one of their top investment themes over the next five years.”
This preference for AI comes into sharper focus in light of BNY’s projections that global spending on AI-related technology could exceed $1 trillion by 2030, making it “one of the swiftest technology adoption cycles in modern times.” The study also predicts that by 2030, approximately 85 percent of “knowledge workers” will use AI daily.
In that same study, BNY also found a significant portion of family offices are enthusiastic about blockchain-adjacent investment opportunities such as cryptocurrencies — although the enthusiasm is more tempered. About 40 percent of the family offices BNY surveyed “are actively investing in cryptocurrencies or exploring doing so.”
Nearly as many family offices (38 percent) voice doubts about cryptocurrencies, due to regulatory concerns and the risk of cybercrime. However, these naysayers stand in stark contrast to respondents in an early 2022 BNY study, where “three-out-of-four family offices [were] engaging with cryptocurrencies.”
Two years can make a big difference, but it’s possible that the enthusiasm expressed in the earlier study reflected attitudes prior to the collapse of FTX — an event that soured many investors around the world on crypto.
Despite any lingering skepticism, BNY’s 2024 research reveals that — for those family offices still bullish on cryptocurrencies — more than half say their enthusiasm reflects a need to keep pace with “new investment trends and investment opportunities.” Another 30 percent say their interest in crypto is driven by “current leadership or the next generation of the family office,” suggesting perhaps that only newer family offices are endorsing crypto.
But not so fast. CoinDesk recently profiled a U.K.-based family office with roots reaching back to 1902, that believes “now's the time to make a contrarian bet on crypto,” and is doing so by investing approximately $3 million in DeFi and emerging market crypto projects.
In other words, despite shifting opinions and trends, many family offices continue to treat cutting edge technologies as worthwhile investment opportunities.
The Avestix Group Venture Capital Fund focuses on a variety of new and emerging technologies. If you think cutting-edge tech may have a place in your investment strategy, click here for a more detailed overview.
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