Analysis of the Reasons Why Family Offices Are Becoming Key Players in Web3 Investments

In recent years, the popularity of family offices among high-net-worth individuals has been steadily increasing. According to relevant data, the number of institutions named "family office" in China has approached 10,000, more than doubling year-on-year. In Singapore, as of the end of 2023, the number of registered single-family offices has surpassed 1,100, with over 40% of the founders coming from mainland China and Hong Kong.

The rapid growth of family offices has also brought about changes in asset allocation preferences. Relevant reports indicate that during 2024, the digital asset allocation of several high-net-worth individuals and family offices has increased from less than 5% to over 10%, with plans to continue increasing in the future. About a quarter of the surveyed family offices have invested or plan to invest in digital assets, with the Asia-Pacific region leading in this area.

To understand why family offices have a natural fit with Web3, we need to go back to the beginning: what problem do family offices actually solve?

What is "Family Office"?

Family offices are regarded as "the ultimate form of asset governance" and are a complete set of exclusive management systems built around family wealth. Depending on the management methods and the service entities involved, family offices can be classified into the following types:

1. Single Family Office (SFO): Established by a single high-net-worth family, serving exclusively that family.

2. Multi-Family Office (MFO): Established by professional organizations to serve multiple families.

3. Virtual Family Office (VFO): A combination of outsourced professional services that forms a "lightweight" operational structure.

4. Overseas Established Family Office: Set up SFOs in places like Hong Kong and Singapore to meet global asset allocation, tax optimization, and other needs.

The primary goal of a family office is to build a dedicated management system that can traverse cycles and adapt to intergenerational inheritance. Its core functions include tax and legal structure design, asset allocation and investment management, family governance and inheritance mechanisms, as well as daily administrative and operational support.

Why is it "family office"?

The reason family offices can naturally align with Web3, especially in the investment path of assets like RWA, lies in the fact that they are governance systems born for "complexity":

1. Cross-border structure: Family offices have the ability to handle investments across regions, legal systems, and currencies.

2. Compliance Identity: Family offices inherently possess a "compliance identity", enabling them to engage in institutional investments and undertake complex equity arrangements.

3. Investment Rhythm: The investment rhythm of family offices naturally aligns with the lifecycle of RWA assets.

4. Embedded Participation: Family offices are not only investors but can also engage in "embedded participation" in project governance.

The intrinsic qualities of family offices are also aligned with the compliance evolution direction that Web3 is promoting:

• Large capital volume and stable style
• High compliance requirements, prudent decision-making
• Clear asset preference, pursuing predictable returns, controllable structure, clear laws, and transparent governance.

From this perspective, family offices are not a type of "old capital" that has mistakenly entered the new world of Web3, but rather one of the most suitable types of long-term capital after Web3 has progressed to the stages of structuring, compliance, and value accumulation.

Conclusion

The involvement of family offices is responding to the issues of lack of funding, channels, and awareness in Web3 through a mature governance framework. It provides a capability system that adapts to long-termism, allowing for the construction of a bridge linking real assets with on-chain rights.

However, family offices are not a one-size-fits-all solution; they have very high requirements for capital size, governance capability, and sensitivity to structure. Investors need to consider their own situation, assess whether adopting a family office path is suitable, and how to establish a truly "usable" family office framework.