Family offices wait 15 to 16 years for cash and startups can fix that
Family offices are moving earlier into venture, and the problem they keep meeting is time: capital that is meant to be locked for 10 years and is increasingly locked for 15 to 16. Alexander Fink of Empirical Ventures said in a LinkedIn post on 7 October 2026, after a family offices panel hosted by Mountside Ventures, that venture has a liquidity problem.
The useful question for founders is whether liquidity can be designed into a company at the start, rather than bolted on years later.
Key takeaways
Fink said 40 per cent of the families in the FOS family office network are actively allocating to venture, ahead of private equity and real estate.
He said venture funds are increasingly taking 15 to 16 years to realise, against the 10 year lifecycle they are often structured around.
In a simple illustration, the same 2.0 times return is worth about 7.2 per cent a year if returned after 10 years and about 4.4 per cent after 16.
Early stage companies are where share rights, transfer rules and trading windows can still be agreed at the outset, instead of retrofitted years later.
Designed in liquidity is enabled, not guaranteed: a trading window still needs a buyer at an acceptable price. The figures are Fink's, given on a panel, and have not been independently verified.
Why family offices are looking earlier and why time is the problem
Fink said venture is moving up the family office agenda, with 40 per cent of the families in the FOS family office network actively allocating to it, ahead of private equity and real estate. He said the best family offices are increasingly choosing between backing the very best managers and going extremely early, because replicating a venture firm's direct investing infrastructure is difficult.
The cost of waiting shows in his numbers. TVPI, or total value to paid in capital, counts unrealised paper value as well as cash. DPI, or distributions to paid in capital, counts only cash returned. Fink gave one fund example with 17 times TVPI and no DPI, and another with 10 times TVPI and 2 times DPI. His conclusion was that paper gains are impressive, but returned capital is what ultimately matters.
What 16 years does to DPI and annualised returns
Time matters as much as the multiple. As a simple illustration, if a fund returns 2.0 times the capital paid in as a single distribution, the annualised return is about 7.2 per cent after 10 years and about 4.4 per cent after 16, a gap of roughly 2.8 percentage points. Real funds call and return capital in stages, so actual figures differ, but the direction holds: the same multiple is worth much less the later it arrives.
The same logic applies to anyone holding a stake in the underlying companies. Founders, employees and early investors can wait as long as the fund does, and a long wait changes how they value a stake, whether they back the next round and how patient they can afford to be.
Why startups are the stage to design liquidity in
Early stage is where terms are still open. The company is young, the cap table is simple, and the articles of association and shareholder agreement can be written with transfer provisions, holding periods and trading windows in mind. Retrofitting liquidity into a company that is five years old, with many investors and several share classes, is usually slower and more contested.
The UK now has parts of the framework. PISCES, the UK regime for intermittent trading of private company shares, is producing live examples: Veremark became the third company to use it with a share sale, and Crowdcube has reported a PISCES pipeline of £543 million. The Financial Conduct Authority has also promised a tokenisation roadmap within weeks.
Tokenisation could be the layer that carries the rules. A token can act as a tradable representation of a share, with eligibility checks and transfer restrictions built in, while the legal share is still issued and filed conventionally and Companies House remains the source of truth. It is one possible mechanism among several, not the answer to every problem.
What this means for SEIS investors and what is still open
The Seed Enterprise Investment Scheme, or SEIS, requires shares to be held for three years to keep the tax relief. That period is a condition of the relief, not a legal lock on the shares: an investor can sell sooner and simply loses the relief on those shares. Placing the first trading window at or beyond the three year point could shorten the realistic wait from the traditional seven to ten years towards three, without giving up relief. Seed investors are not short of appetite, since seed deal volumes fell 27 per cent while SEIS funds kept selling out, one recent analysis found. The scarce part is the route back out.
Several questions remain open: how a tokenised ledger reconciles with Companies House in practice, what nominee and custody structures satisfy both HMRC and the FCA, and what formal HMRC guidance will say, since HMRC has not ruled on tokenised structures. There is also the buyer question the panel raises without answering. If family offices are choosing between the best managers and very early direct deals, who buys in the middle? A founder raising a first round can still ask for the answer to be written into the terms.
This article is general information and not financial, legal or tax advice.
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