For decades, buying stock in a hot startup meant you were allowed to invest in the funds managed by top VCs. But with the AI boom driving an investment frenzy, more family offices and private wealth are bypassing VC middlemen to get directly to the table.
“Companies are staying private longer and there are fewer IPOs now than we’ve seen historically,” Mitch Stein, founder of Arena Private Wealth, an investment advisory firm for high-net-worth individuals, told TechCrunch on a recent episode of Equity. “A lot of money is being made long before companies go public, and right now the private markets are dominated by a lot of these AI names. The family offices they have [directly into AI startups] it’s right.”
Arena recently raised a $230 million round in artificial intelligence chip startup Positron, an investment that earned the Midwestern company a board seat. Stein says this is part of a deliberate shift away from being passive allocators and becoming “active participants in the capital markets.”
The urgency among today’s family offices is real.
“The global AI infrastructure is being built now, so you’re either going to get in early and have the opportunity to make more seed investments…and build a portfolio, or you’re going to miss out and take random bets,” Ari Schottenstein, Arena’s head of alternatives, told TechCrunch.
Stein put it more bluntly: “The biggest risk is not having exposure to AI, not what could happen to your AI investments.”
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The numbers reflect that sentiment. In February, the family offices were held 41 direct investments to start-ups, almost all connected to artificial intelligence. Among them are high-profile names such as Laurene Powell Jobs’ Emerson Collective at World Labs, Azim Premji’s family office at Runway and Eric Schmidt’s Hillspire at Goodfire. According to BNY Wealth research, 83% of family offices say AI is a top strategic priority for the next five years, and more than half have exposure to AI through investments.
Some go even further. A growing number of family offices are incubating their own AI companies, raising their first several million, taking on operational roles and developing the same entrepreneurial instincts that built their wealth in the first place, according to Schottenstein. Jeff Bezos’ decision to serve as CEO of his own robotics company, which raised an initial $6.2 billion last year at a valuation of nearly $30 billion, is a high-profile example of the model.
On a smaller scale, Stein pointed to Tyson Tuttle, an Austin-based angel investor and former CEO of Silicon Labs — which agreed to be acquired by Texas Instruments for $7.5 billion. Tuttle co-founded Circuit, a startup that uses artificial intelligence to improve manufacturing and distribution, growing a $30 million angel round which includes $5 million from his own family office.
However, not everyone who comes to the table has started a company. The Arena team comes from institutional finance and they argue that strict due diligence is what gives them the right to lead rounds.
“We take our time, we’re a very slow yes, we say no a lot,” Schottenstein said. “We certainly invest in the resources, the experts and the people necessary to make sure that a company is what it says it is and can do what it says it’s going to do.”
For the Positron deal, that meant working with third-party experts to validate the technology, but also reading the capital table itself as a signal: “If Arm comes to a deal, we’d like to believe your technology is real,” Schottenstein said. Arena also knew that Oracle was a major customer, making the Positron one of the only AI chips to be developed on a hyperscaler not named Nvidia or AMD.
This selectivity shapes how the Arena engages once entered. Unlike a typical VC that spreads risk across a portfolio, Arena does a small handful of direct deals per year, which completely changes the stakes. When they’re in, they’re all in. Positron is their only investment in an AI inference chip.
“When we’re involved in direct single-asset deals, and we only do a small handful each year, our stakes are incredibly high,” Stein said. “We don’t manage portfolio-level returns. We don’t model failure on a single asset transaction. We take huge risk with pooled client capital. We take reputational risk as a company. We have huge time and resources. There’s an alignment that founders value.”
