Imagine a world where even the wealthiest families are playing it safe with their investments, yet they're still pouring millions into cutting-edge tech and life-saving innovations. That's the intriguing reality unfolding in the world of family offices right now.
While deal-making on Wall Street seems to be picking up steam once again, the investment arms of ultra-high-net-worth families are proceeding with extra caution. According to exclusive data shared with CNBC by the private wealth platform Fintrx, family offices completed just 54 direct investments in September—a sharp 46% drop compared to the same month last year. But here's where it gets controversial: despite this overall slowdown, these billionaire-backed entities are still diving headfirst into massive funding rounds for ambitious startups.
Take, for instance, the recent $300 million seed investment in Periodic Labs, a company founded by ex-researchers from OpenAI and DeepMind. This venture aims to revolutionize scientific discovery by using AI-powered robots to conduct lab experiments autonomously. It's a bold bet on artificial intelligence that could accelerate breakthroughs in fields like drug development or materials science, potentially saving years of manual research time. And who are the big names backing it? None other than the family offices of Amazon's Jeff Bezos and former Google CEO Eric Schmidt.
And this is the part most people miss: health care and biotech aren't being left behind either. High-profile investors continue to show strong interest in these sectors. For example, Harbor Health, a primary-care clinic network, secured $130 million from Michael Dell's DFO Management, along with Breyer Capital and Martin Ventures. The startup's chief medical officer, Dr. Clay Johnston, previously served as dean of the Michael & Susan Dell Medical School at the University of Texas at Austin. Much of this funding will go toward broadening their insurance options and establishing more clinics, making quality health care more accessible to underserved communities.
The broader private equity market's hesitation has actually opened doors for family offices to seize opportunistic investments. In September, the Mitchell Family Office, based in Birmingham, Michigan, snapped up Cos Bar, a luxury beauty retailer, for an undisclosed sum. Principal Mark Mitchell revealed to CNBC that his offer was accepted in under a month. Cos Bar had been under private equity ownership for nine years and was the final deal in their fund, making it ripe for a fresh start.
To understand Mitchell's approach, let's rewind a bit. He launched his family office in 2015 after selling a controlling stake in his home health-care company, U.S. Medical Management, to Centene. He eventually cashed out for a total of $325 million. With his roots in health care, Mitchell has historically focused on that sector, investing in areas like adolescent inpatient psychiatric facilities and bone marrow harvesting technologies. But—and here's a subtle twist that might spark debate—his office is now branching out into other industries to align with his family's evolving interests and passions.
One standout example is how Cos Bar's upscale locations will serve as showrooms for AI-enhanced smart mirrors from his wife Colby's company, Swan Beauty. Priced at $695, these mirrors scan skin to suggest personalized beauty products and even allow virtual makeup trials. Mitchell describes this shift as moving away from decisions driven solely by his own 'patriarchal' instincts toward ones influenced by the next generation. At 60, with five children aged from 6 to 30, he's actively involving them in the family office to foster motivation and success.
His adult son and daughter, for instance, have launched ventures under the family office's umbrella—an automotive business and a clothing line, respectively. Mitchell notes how this involvement keeps them driven: his son is the first in and last out every day, scouting real estate opportunities, while his daughter dedicates 14-hour days, seven days a week, to her company. This sets a powerful example for their younger siblings, countering the stereotype that wealthy heirs might slack off post-college. But is this approach truly empowering, or does it risk pressuring kids into family expectations? That's a debate worth exploring.
In April, Mitchell expanded his portfolio by acquiring AFC Toronto, a women's soccer team. What started as a casual hobby has evolved into deeper operational involvement, strengthening family bonds. His daughter is now eyeing her own soccer team purchase, his younger sons have taken up the sport, and the whole family rallies at games. As Mitchell puts it, this multigenerational focus has been a wonderful way to unite and engage everyone.
What do you think? Are family offices like Mitchell's setting a positive example for wealth transfer, or are they blurring lines between family and business in ways that could backfire? Do you agree that AI and health care are safe bets even in uncertain times, or should investors diversify more aggressively? Share your thoughts in the comments—we'd love to hear your take!
