The AI ​​gold rush is pulling private fortunes into riskier early bets

For decades, buying shares in a hot startup meant allowing them to invest in funds managed by top venture capital firms. But as the AI ​​boom causes an investment frenzy, more family offices and private equity firms are bypassing venture capital brokers to get straight to the cap table.

“Companies are staying private longer, and there are fewer IPOs now than we have 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. Family offices that are allocating this money [directly into AI startups] “Right.”

Arena recently co-led a $230 million round in AI chip startup Positron, an investment that earned the Western company a seat on the board. This is part of a deliberate shift away from being passive distributors toward becoming “active participants in the capital markets,” Stein says.

The urgency among family offices today is real.

“The world’s AI infrastructure is being built right now, so you’re either going to get in early and have the opportunity to make more of the initial investment…and really build a portfolio, or you’re going to miss out and take random bets,” Ari Schottenstein, head of alternatives at Arena, told TechCrunch.

Stein put it more bluntly: “The biggest risk you face is the lack of exposure to AI, not what could happen to your AI investments.”

The numbers reflect this sentiment. In February, family offices made 41 direct investments in startups, almost all of them related to artificial intelligence. These include notable names such as Emerson Collective from Laurene Powell Jobs to World Labs, Azim Premji’s family office to Runway, and Hillspire from Eric Schmidt to Goodfire. According to BNY Wealth research, 83% of family offices say AI is a top strategic priority over the next five years, and more than half are leveraging AI through investments.

Some go further. A growing number of family offices are incubating their own AI companies, founding their first multi-millionaires, taking on operational roles, and deploying the same entrepreneurial instincts that built their fortunes in the first place, according to Schottenstein. Jeff Bezos’ decision to serve as CEO of his own robotics company, which raised a seed round of $6.2 billion last year at a valuation of nearly $30 billion, is a prime example of this model.

On a smaller scale, Stein pointed to Tyson Tuttle, an Austin-based angel investor and former CEO of Silicon Labs — who has 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, and has raised $30 million in an investment round that includes $5 million from his family office.

However, not everyone who comes to the table has founded a company. The Arena team works in institutional finance, and they argue that rigorous due diligence is what gives them the right to lead rounds.

“We take our time, say yes very slowly, and say no too often,” Schottenstein said. “We certainly invest in the resources, experts, and people needed to make sure the company is what it says it is, and can do what it says it will do.”

For the Positron deal, that meant working with outside experts to validate the technology, but also reading the cap table itself as a signal: “If Arm is going to do a deal, we like to think your technology is real,” Schottenstein said. Arena also knew that Oracle was a major customer, making Positron one of the only AI chips deployed in an ultra-fast scale not named Nvidia or AMD.

This selectivity shapes how engaging Arena is once inside. In contrast to the typical risk of distributing venture capital across a portfolio, Arena makes a small set of direct trades annually, which completely changes the risk. When they’re indoors, they’re all indoors; Positron is their only investment in an AI inference chip.

“When we engage in direct single-asset trades and we only do a few 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 on a tremendous amount of risk with concentrated client capital. We take reputational risk as a firm. We devote a tremendous amount of time and resources. There’s an alignment there that founders appreciate.”