Family offices abandon traditional funds as risk appetite shifts toward secondary stakes of top AI developers

Global family offices are experiencing a rapid shift in their investment compass, driven by a voracious appetite to capture AI returns via routes that bypass traditional venture capital channels. Private wealth adviser Juan Val of Atlas Capital in San Francisco describes the equation simply: wealth managers prefer an AI deal that can triple capital in three months over long-term commitments in sectors such as clean energy that require three years to achieve the same return. This momentum is not just about abundant liquidity; it reflects a structural change in investment behavior, as a new generation of family-office officials discards closed-end funds that lock capital for a full decade without prior disclosure of the backed companies.

These offices are moving heavily toward direct purchase of shares from current investors in the secondary market, or striking direct deals that secure specific stakes in leading companies. The sector wields enormous financial influence; Deloitte data for 2024 showed family offices managing $5.5 trillion, with forecasts that the figure will reach at least $9.5 trillion by 2030. A 2026 global family-office report from UBS, which surveyed 307 family offices worldwide with an average wealth of $2.7 billion, revealed that alternative investments, including private equity, venture capital and private credit, now make up 42 percent of the average investment portfolio.

The scene recalls previous financing cycle volatility; direct deals rose to 13 percent of family-office portfolios in 2021 versus about 9 percent in 2019, and the total number of deals peaked that year at 17,460 transactions worth $1.05 trillion worldwide, according to a BWC study. However, that trajectory reversed quickly as interest rates rose and returns fell, causing direct investment and acquisition deals to drop 53 percent by the end of 2023, reaching their lowest level in a decade during the first half of 2025. Today these offices return with a different approach, writing much larger financial checks aimed at a very limited number of high-quality deals.

The secondary market has become the least risky sanctuary for venture capital in investors' eyesAccording to Val, it allows acquisition of stakes in entities that already have a growing user base and explicit revenue proof. Angelina Ho, head of investor relations at Bridge Funding Global, explains that this method enables family offices to capture exposure to a specific target company without having to bear the risk of a portfolio containing twenty or thirty startups. This demand translates into a willingness to pay first-round-like prices for secondary-stage risk, even if the standard return margin is narrow; the market has seen investment offers ranging from $50 million to $100 million to buy stakes in Anthropic, which shares with OpenAI the lead in assets most sought after for financing competition, according to analyst Emily Cheng of PitchBook.

JPMorgan Private Banking figures confirm that 65 percent of global family offices plan to prioritize AI investments despite concerns about valuation inflation. Maximilian Conkle, senior investment officer at UBS Global Wealth Management, notes that asset managers operate in an environment weighed down by geopolitical tensions, rising debt levels and recession risks, and view AI as a vital long-term growth opportunity, striving to balance asset protection with returns through geographic and currency diversification. Conversely, Bruce Lee, founder of Quebec Wealth Management, warns that the bursting of a valuation bubble will not be limited to tech firms but will extend to entire equity markets, pointing out that an appetite for quick returns undermines investors' desire for disciplined financial hedging.

This global shift has direct implications for the tech-investment environment in the Arab region. In Gulf markets, family offices and wealth managers in Riyadh, Abu Dhabi and Dubai face heated international competition to secure secondary stakes in globally leading entities developing foundational models, raising entry costs and imposing increasing pressure on portfolio returns should any price correction occur. Conversely, founders of startups in Egypt and the Levant must prepare for a period of liquidity scarcity directed at early-stage financing, as the direct-deal capture of family-office capital dries up funds available to regional venture-capital funds. These offices will not obtain financing today by relying on theoretical assumptions, but by demonstrating a clear path to commercial revenue and an operational model capable of withstanding the high costs of computing and inference.