Below is a long-form, Framer-ready article that goes deeper conceptually, keeps a professional but opinionated tone, and is structured for online reading (clear sections, short paragraphs, scannable logic).

“We Tried Venture — But We Don’t Believe in the Asset Class”

When a German family office says, “We tried venture, but we don’t believe in the asset class,” it sounds like a considered conclusion.

In reality, it is often a misdiagnosis.

Because in most cases, what they describe as “venture capital” was something else entirely.

What Actually Happened

Typically, the family office did not build a venture portfolio.

Instead, they wrote one or a handful of very large checks into individual startups — often one to five companies — sourced through their personal network.
A friend of the family.
A relative.
Someone from the golf or tennis club.

The decision process was informal, relationship-driven, and highly concentrated from day one.

That alone already deviates significantly from how venture capital works. But the more fundamental mistake came afterward.

Treating Startups Like Private Equity

Once invested, these startups were managed and structured like private equity investments.

Common patterns include:

• Taking a very large equity stake at an early stage

• Designing governance structures optimized for control, not speed

• Negotiating terms that look attractive on paper but signal risk to future investors

• Leaving little or no room for follow-on capital

From a PE or control-investor mindset, this can feel rational.
From a venture perspective, it is toxic.

Early-stage companies do not win by being controlled.
They win by growing fast enough to continuously attract new, high-quality capital.

The Predictable Downward Spiral

Once the initial structure is set up this way, the outcome is almost always the same.

Because external investors see the cap table and step back.

They see:

• A dominant shareholder with control rights

• Limited upside due to early dilution

• High signaling risk for future rounds

As a result:

• Every new financing round becomes the family office’s problem

• The founders come back again and again for bridge capital

• No competitive term sheets emerge

• The company slows down

• Momentum is lost

Eventually, the investment fails — not necessarily because the company was bad, but because the financing structure made success unlikely.

The conclusion then sounds logical:
“Venture doesn’t work.”

But the real issue was never the asset class.

Why This Is Not Venture Capital

Venture capital is built on three fundamental principles:

1. Portfolio construction
   Returns follow a power law. A small number of outliers drive the majority of returns. Concentration into a few bets dramatically increases failure risk.

2. Follow-on optionality
   The goal of early rounds is not control, but positioning — enabling the company to raise the next round from stronger investors at higher valuations.

3. Founder incentives and speed
   Growth-stage success requires motivated founders, clean cap tables, and minimal friction in decision-making.

When these principles are ignored, the result is not “bad venture.”
It is simply not venture at all.

The Structural Mismatch

The deeper problem is a mindset mismatch.

Family offices often come from backgrounds where:

• Capital preservation matters more than asymmetrical upside

• Control is seen as risk mitigation

• Concentration feels safer than diversification

Venture capital operates under the opposite assumptions:

• Losses are expected

• Diversification is mandatory

• Control early is often value-destructive

Applying PE logic to early-stage startups produces structurally bad outcomes — even with good founders and strong markets.

The Cost of the Wrong Conclusion

When family offices conclude that venture capital “doesn’t work,” they often exit the asset class entirely.

That is unfortunate, because it means:

• They miss exposure to one of the few asset classes with true asymmetric upside

• They lose access to future-oriented innovation and founder networks

• They repeat the same structural mistakes in adjacent areas

The lesson is not that venture is broken.

The lesson is that venture requires discipline, portfolio thinking, and an understanding that early-stage investing is fundamentally different from buying companies.

A Better Framing

The more accurate statement would be:

“We didn’t run a venture strategy — we made a few concentrated startup bets with the wrong structure.”

That realization is uncomfortable.
But it is also the starting point for doing it properly.

Because venture capital is not about believing in stories.
It is about understanding risk — and constructing portfolios that can survive it.