Single Family Offices and UHNWI Investors: The Rise of Smart Direct AI/Tech Investing

Legendary VC Vinod Khosla recently remarked in a conversation with OpenAI CEO Sam Altman that 90% of VCs add no value to startups and 70% even harm them. While some may not fully agree, the remark reflects truths I’ve long observed across the global entrepreneur-investor ecosystem.

Khosla’s bluntness might sound provocative, but for those of us who’ve spent decades in the trenches of innovation and entrepreneurship, his critique resonates. Too many investors rely on pattern-matching or financial models alone—failing to recognize that early-stage company-building is nonlinear, deeply human, and ultimately talent-driven. The best investors elevate, not inhibit, that process.

In my view, around 90% of a startup’s success stems from its founders and early key teammates. This underscores the irreplaceable value of talent, grit, and leadership at the earliest stages—factors that even sophisticated capital often underestimates. Yet far too many investors miss out on transformational MOIC/ROI potential due to flawed assumptions, ego, greed, fear, or a fixed mindset—not a visionary growth mindset.

Roelof Botha, Sequoia Capital’s Managing Partner, recently said:
“My biggest mistake as an investor is the failure of my imagination.”

That line stuck with me. Years ago, Roelof and I served as two of three judges at a Stanford student entrepreneurship panel. His reflection reveals how imagination—often dismissed in traditional investment thinking—is in fact critical when evaluating frontier opportunities.

In my speaking engagements with principals and chief investment officers (CIOs) of single family offices (SFOs) and UHNWI private investors, I often spotlight a key trend:
More entrepreneurial investors are shifting from being passive LPs in VC funds to pursuing direct, smart investments in AI/tech ventures—from early stages onward.

The structural limitations of traditional VC funds

While many investors still allocate to select VC funds with multiple LPs—established or emerging—the shift toward direct investing is being driven by clear structural frustrations and the potential for better returns in shorter timeframes.

Most VC funds underperform relevant benchmarks, restrict flexibility with 7–10+ year lockups, and charge management fees regardless of outcome. And they often follow the herd—chasing familiar themes, crowded cap tables, and overplayed categories or geographies.

Smart SFOs and UHNWIs are realizing they no longer need to accept these limitations. They’re exploring a more dynamic approach: smart direct investing in high-impact ventures, where they can back exceptional founders directly and retain strategic control.

Smart direct AI/tech investing: a mindset-driven advantage

This approach isn’t about writing opportunistic checks. It’s about SFO principals and CIOs who possess the mindset, skills, and network to source and bet on transformative ventures—and who understand the nuances of emerging, high-impact technologies and even business models.

Based on what I’ve observed, smart direct investing offers strategic advantages unavailable through fund structures:

• Closer relationships with founders and senior executives
• Greater alignment with long-term values and personal objectives
• More control over deal terms, entry timing, and exposure management
• Early access to category-defining innovation while competitive noise is still low and before the market crowds in

We’re entering a moment where some AI-native companies aren’t just reshaping industries—they’re creating entirely new categories. The convergence of compute power, capital efficiency, and global tech talent makes it possible to build billion-dollar companies with lean teams and clean cap tables faster than ever before.

For entrepreneurial investors who can navigate this landscape with sound discernment and vision, this is a generational opportunity—not just to earn, but to build and shape the future.

And the upside? 100X to hundreds of X MOIC—or even higher—is a real possibility for those wise enough to attract and invest in the right top deals, some of which may still be pre-revenue, yet category-defining.

I believe that high-margin growth and high-MOIC opportunities are especially found in impactful new categories within Applied AI—part of the broader AI solution stack and ecosystem, which also encompasses enabling layers such as Edge AI, Cloud AI, and the underlying compute infrastructure, including GPUs and data centers. These are precisely the kinds of opportunities that some traditional VC firms, institutional family offices, and gatekeepers often overlook—or dismiss too early.

Fixed mindset vs. visionary growth mindset

Despite this window of opportunity, I continue to be surprised by how common fixed mindsets and linear (and often small) thinking still are—even among experienced investors. These show up as rigid thought patterns, fear of uncertainty, or overdependence on outdated validation metrics.

In contrast, a visionary growth mindset is marked by humility, curiosity, strategic imagination, and adaptability. These qualities are rare but essential—both in founders and investors.

I’ve coached a wide range of high-achieving students, leaders, and entrepreneurs one-on-one. For example, one such young leader went on to identify a promising AI venture opportunity. Most institutional investors passed—focused on benchmarks or the lack of comparables. But the founder kept building. Within a few years, his still-private company became a unicorn and one of the top two most recognized in its category. That’s what imagination and resilience can do. I wouldn’t be surprised if the company is acquired for billions in the near future.

Having served as a mentor in the Thiel Fellowship ecosystem—which has supported young adult founders and produced multiple young centimillionaires and billionaires—I’ve learned to recognize these intangibles early. And I’ve seen how the right capital, paired with the right mindset, unlocks nonlinear or exponential outcomes.

From passive allocators to strategic co-builders

The smart direct investor doesn’t just allocate capital. They build relationships, support founders, and contribute to value creation—both tangibly and intangibly.

Some of the most astute SFOs I know are actively evolving from passive LPs into strategic co-builders. They’re:

• Investing with “patient capital,” conviction, and clarity of purpose
• Collaborating with peers, operators, and trusted advisors to source proprietary opportunities
• Focusing on fewer, higher-quality deals with founders capable of driving meaningful impact—and generating exponential upside
• Mentoring Next Gen heirs to think critically, act boldly, and lead wisely

This approach requires time, discernment, and courage—but the upside isn’t just measured in outsized returns. It’s measured in influence, legacy, and contribution.

Smart, strategic, and human

Too many family offices remain held back by structures and habits designed for a different era. For those with the appetite to lead rather than follow, smart direct AI/tech investing presents a timely and transformative opportunity to rethink what wealth—and influence—can mean in this decade and beyond.

It’s not about chasing shiny trends. It’s about thoughtful engagement—investing in impactful solutions to real problems, backing extraordinary talent, generating outsized returns, and bringing a human dimension to innovation.

If this perspective resonates—whether you’re an SFO principal, CIO, UHNWI investor, or someone who thoughtfully advises them—I’d welcome a private, nuanced conversation.