Zoe Chew

April 7, 2022

Alternative Assets, Online Healthcare & Family Offices

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Issue #02

3 market trends + 3 startup opportunities:

  • The future of private wealth management and family offices (Fintech)
  • Democratize investment opportunities and helping everyday individuals to build wealth (Fintech)
  • Direct-to-consumer (D2C) for healthcare (Wellness tech)

Trend #1: The future of family offices and private wealth management will be remote

Family offices exist to help high-net-worth individuals (ie. $100 million+ in liquid assets) manage, preserve, and grow wealth. They help clients to establish an in-house team of experts to support their financial and personal needs.

Affluent individuals and influential families with vast fortunes seek private wealth managers for financial management, investment advisory, charity planning, tax strategy, accounting, and estate planning.

The rise of digitization opens up tremendous opportunities for virtual family offices. This means digitizing financial services delivery, portfolio management, investment planning, financial reporting, etc.

🚀 Takeaway

As wealth creation continues to develop in the younger generations (non-generational wealth holders), digital family offices will become more accessible for a broader range of wealthy and successful families, not just favoring the ultra-wealthy.

🔥 See Startup Opportunity #1

Trend #2: Crowdfunding platforms will continue to democratize investment opportunities and help individuals to build wealth

With equity crowdfunding platforms, individuals and even unaccredited investors will get a chance to invest their money in alternative asset classes (i.e. other than typical cash, stocks, and bonds).

For example, real estate crowdfunding. Companies like CrowdStreet, Fundrise, PeerStreet, and DiversifyFund (starting with as little as $500) are invented to connect investors with commercial real estate projects.

AngelList and Microventures allow individuals to access startup investments. Investors get paid based on the equity percentage they owned in the companies they have invested in.

Republic allows everyday investors to access a marketplace of alternative assets — startups, real estate, video games, and crypto.

🚀 Takeaway

Create solutions to help everyday individuals to own alternative asset classes. Provide due diligence and vehicles to diversify their portfolios.

🔥 See Startup Opportunity #2

Trend #3: Direct-to-consumer (D2C) for online pharmacy is changing the way consumers purchase healthcare products & services

Traditional pharmacy retailers are facing high competition and reduced margins, thus can’t afford to compete on the lower-cost value proposition.

Whereas D2C online healthcare brands are gaining popularity due to niche-focused ailments, personalized approach, and eliminate middlemen to ship their products at a lower cost.

Accessing diagnosis, prescriptions, clinical appointments, medications, and physicians are going digital.

Cove provides online treatment for migraine patients. Parsley Health provides online healthcare for patients with chronic conditions.

Without in-person visits, online pharmacies help eliminate social stigma for obtaining prescriptions related to sexual health (Roman, Rory) and hair loss (Keeps, Hims, Hers).

🚀 Takeaway

Create D2C brands for wellness focusing on the human potential and performance of knowledge professionals.

🔥 See Startup Opportunity #3

Startup Opportunity #1: Virtual office for private wealth management firms

💡 The rise of digitization opens up tremendous opportunities for virtual family offices. This means digitizing financial services delivery, portfolio management, investment planning, financial reporting, etc.

Create a virtual operating system to help traditional family offices digitize their operations for clients. A platform that contains a suite of tools to help clients manage investment projects, financial tracking, portfolio management, contracting, advisory & collaboration. Think FileVine, but for family offices.

For Who

  • Family offices and private wealth management firms that are managing multiple wealthy clients (i.e. multi-family offices).

Problem

  • Lack of collaboration & synergy. With a large team of advisors, different expertise working on multiple projects for a wealthy client, it’s hard to keep track of the status & results of these projects. This creates slow communication and often loses sight of the client’s needs and goals.
  • Vetting & qualifying. Time-consuming process to conduct due diligence and assess the right talents and experts to run the family offices.
  • Cybersecurity and data breaches becoming a key concern.
  • Robo-advisors and investment automation solutions like Betterment, WealthFront, and InteractiveAdvisors are catered to everyday individuals, therefore, they are not suitable for sophisticated clients who have complex financial management needs.

Solution

  • Cloud collaboration. A virtual family office management software that allows a team of advisors to collaborate, manage projects, and work together. Provide communication tools, i.e. meetings, scheduling, video conferencing, call, and chat.
  • Analytics & dashboard. Keep track of clients’ goals, metrics, financial performance, assets visualization, Return on Investment (ROI).
  • Investment management. Portfolio management, risk evaluation, investment analysis, accounting, performance tracking & client reporting.
  • Document management. Provide cloud storage to manage online documents. Secured by end-to-end encryption. Visibility tracking to prevent unauthorized access to confidential documents.
  • Contract management. Manage and generate online contracts, hire and manage freelance experts, budgets, invoices, payroll, online payments.

Revenue Model

  • Subscription. Charge family office organizations to access the full features of the platform. For product feature set inspiration, check out Private Wealth Systems.

Venture Scale

  • Industries: FinTech, Wealth Management, SaaS, Software
  • Business model: Subscription
  • Market potential: ◼️◼️◼️◼️◻️ (1) Significant growth in private wealth has created 12,000–15,000 new family offices around the world. (2) The rising number of wealthy individuals in North America has doubled between 2010 and 2019. (3) Fintech becomes the driver for developing tech platforms in the private wealth space. (4) Lucrative target audience, high spending power.
  • Execution strategy:(1) Start by identifying repetitive processes of running family offices and automating these workflows for potential clients. (2) Focus on a few use cases before expanding into another product category. (3) Training-as-MVP. Sell online training to family offices to help them adopt privacy-based products or investment automation workflow. Start generating revenues — even before you build the software.
  • Moat: (1) Private wealth clients are highly concerned over data breaches, security, and privacy. Software providers who can provide data privacy & protection at the core will win the trust of family offices. (2) To develop more than just a piece of client management software, integrate AI and data intelligence to transform and predict datasets into financial insights; make informed investment decisions, and grow ROIs for the clients.

Startup Opportunity #2: Co-investing & co-refinancing in commercial real estate projects

💡 Create solutions to help everyday individuals to own alternative asset classes. Provide due diligence and vehicles to diversify their portfolios.

Connect investors with vetted investment deals in commercial real estate projects. Real estate companies can raise equity-based capital from a pool of investors.

The investors can access new investment deals and income-producing properties, co-refinance property by lending cash to property owners to renovate their property to add value and increase rental incomes; getting returns via profit-sharing mechanisms when the property is sold or rented.

For Who

  • Commercial real estate developers — Companies who are seeking to raise equity-based crowdfunding for their real estate projects from a pool of investors directly online.
  • Property investors — Individuals at different wealth levels can invest in real estate projects which the developers will utilize the fund in commercial real estate development. Investors who are seeking to diversify their commercial real estate portfolio.
  • Commercial property owners — Commercial property owners looking to refinance their properties from a group of investors via co-refinance instead of banks.

Problem

  • Many real estate crowdfunding platforms offer exclusive investment opportunities that are only accessible by accredited investors.
  • Single-deal real estate investment is high-risk and requires larger capital to start with since you’re the only investor in a deal.
  • Traditional real estate investing only favors people who have the right networks, deals, and expertise to generate high returns.
  • Banks and human brokers are slow and often come with middlemen fees that can be eliminated through digitization.

Solution

  • Access commercial real estate investment deals. Identify and unlock high-return investment opportunities and income-producing properties. Property investors can browse investment opportunities in a curated online marketplace, set up an account, and build their portfolios.
  • Crowdfunding, syndication & co-refinancing. De-risk real estate investments by sharing the risks with many investors via syndication funds. Crowdfunding also allows real estate projects to raise capital quickly and build new properties for investment returns. Co-refinancing unlocked lending sources from many investors instead of banks.
  • Fully-managed process. Provide due diligence and a careful review process before listings approval and advisory services to help all parties succeed in real estate investing.
  • Analytics & dashboard. Track real estate market trends, insights, portfolio performance, earnings, status, updates, interest rates, etc.

Revenue Model

  • Crowdfunding commissions. By taking a % of the total funds raised per commercial real estate project.
  • Co-investment commissions. By taking a % of the total investment capital gain from co-investors.
  • Profit-sharing. Distribute the returns via profit-sharing mechanisms when the property is sold, acquired, or rented.
  • Premium listing fees. Charge a fee for listing real estate projects for accounts with premium features — i.e. sponsored listing, recommended listing, ads, location-based recommendation, keyword-based recommendation, etc.

Venture Scale

  • Industries: Real Estate Investment, FinTech, Crowdfunding
  • Business model: Marketplace
  • Market potential: ◼️◼️◼️◼️◻️ (1) Increasing adoption of digital technology in the real estate industry. (2) Growing VC investment deals in real estate tech companies, total funding amount of $16 billion in 2019. (3) Post-COVID reopening economy will create opportunities for utilizing commercial properties for co-living, solo traveling accommodation, co-working demand from digital nomads who work remotely, therefore, boosting property rental incomes.
  • Execution strategy: (1) Demand follows supply. Start by sourcing listings of handpicked real estate projects. (2) In the early stage, it’s best to focus on one specific type of deal, real estate project segment/category, or platform feature set. (3) Requires solving the marketplace chicken-and-egg challenge, handling different transaction models and margin structure of the crowdfunding vehicle.
  • Moat: (1) Unique inventory — source high-return, quality institutional real estate projects. (2) Create a win-win-win model by helping small investors to make money by co-investing and funding real-estate projects; real estate developers can raise capital from a pool of investors. The platform benefits from transaction commissions simultaneously from both the developers and investors. (3) Aim to lower transaction costs using marketplace efficiency where human brokers can’t compete with; help investors maximize return.

Startup Opportunity #3: D2C for nutrition and holistic wellness

💡 D2C online healthcare brands are gaining popularity due to niche-focused ailments, personalized approach, and eliminate middlemen to ship their products at a lower cost.

Personalized nutrition subscription and online wellness program designed to achieve long-term results by focusing on holistic wellness — sleep, diet, nutrition, exercise, relaxation, mental & emotional health.

For Who

  • Working adults age between 18 and 65 have consistent complaints about lack of energy, drive, motivation, mental distress, and burnout.
  • Knowledge workers and high-performing working professionals, i.e. executives, CEO, decision-makers, engineers, creatives who want to level up their human potential and daily productivity.

Problem

  • Wellness crisis in the modern world. Almost 90% of all doctor’s office visits are caused by stress. It becomes more common for adults to experience daily discomforts including headache, tiredness, fatigue, lack of energy — which causes lack of motivation, mood swings, and depression.
  • Short-term results. Doctors often prescribe temporary solutions rather than treating the fundamental problems, i.e. sleep, nutrition & stress management.
  • Unreliable ‘doctor’ advice. General practitioners (GP) treat all types of illness, however, they do not specialize in any domain of medicine. In fact, most doctors have not studied enough about nutrition in medical school.
  • Inaccurate formula. It’s hard to figure out the right supplements and doses without the right lab work or testing. Consuming over-the-counter (OTC) medicine only suppresses the symptoms rather than healing the root causes.
  • Middlemen costs. Traditional pharmacies mark up their costs to cover intermediary fees incurred in the supply chain: retailers, wholesalers, distributors, and storefront salespeople commissions.

Solution

  • Self-testing kit. At-home blood vitamin & mineral test to reveal nutritional imbalance or vitamin deficiency to provide personalized nutrition products based on individual needs. The result of the test can be integrated into a smartphone app to monitor changes.
  • Direct-to-consumer (D2C) nutrition subscription. Sell your products with your own website and handle packaging, marketing & shipping the product directly to consumers. By removing third-party intermediaries, you can cut out markup fees, lower costs for your customers, and include free shipping as benefits.
  • Online wellness programs that deliver results. Don’t leave customers hanging with a box of supplements. Provide an online program to access certified professionals on how to optimize sleep, diet, exercise, relaxation, mental health & emotional health. Ongoing wellness performance tracking to ensure long-term transformation.
  • Holistic wellness approach. Consider full-spectrum wellness and provide solutions that can achieve optimal performance for a person in these areas— body, mind, emotion, and spirit.

Revenue Model

  • Monthly subscription, $60 to $100 per month. Multivitamins subscription box delivered to your doorstep. For customers who want to shop for personalized daily supplements that are based on online tests and assessments.
  • Micronutrient testing, one-time fee. In-depth lab work and reports to identify nutritional imbalance or deficiency. For customers who want to treat the root causes of their symptoms and consume accurate vitamin doses and formulas.
  • Cohort-based wellness program, one-time fee or yearly subscription renew. 4-month online program to access certified professionals on how to optimize sleep, diet, exercise, relaxation, mental health & emotional health. For customers who want to achieve comprehensive results in all areas of their well-being.

Venture Scale

  • Industries: Healthcare, Nutrition, Wellness, Personal Health
  • Business model: Direct-to-Consumer (D2C), Subscription
  • Market potential: ◼️◼️◼️◼️◻️ (1) The United States has the highest spending on health-related consumption in the world. (2) Over $2 billion of VC funding in Direct-to-Consumer brands between 2018 and 2019. (3) Roman, a D2C healthcare company raised $500 million at $5 billion valuations in 2021.
  • Execution strategy: (1) Start by creating a digital storefront using tools like Shopify, WordPress, WooCommerce, Webflow. Integrate Stripe for payments. Set up monthly subscription workflow using Memberstack. (2) Create compelling incentives to acquire & convert new customers, e.g. free for the first 30 days. (3) Increase sale value and MRR using cross-selling, e.g. offer customers who intend to buy a product to purchase additional products related to what they are already adding to their cart.
  • Moat: (1) Develop an in-house team of experts to assist customers with 360-degree wellness needs — nutritionist, personal trainer, certified life coach, holistic healer. (2) Community moat: Build an engaging online and offline community around a D2C nutrition brand via events, expert talks, workshops, conferences, built-in social networks, etc. (3) Content moat: Establish organic content influence around health and wellness topics on SEO, TikTok, YouTube, Instagram.