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The Role of Family Members as Investors in Family Business Strategies for Maximizing Returns and Minimizing Risks

The Role of Family Members as Investors in Family Business: Strategies for Maximizing Returns and Minimizing Risks

Individuals or groups that invest in family-owned and run enterprises are referred to as family business investors. These investors might be family members or outside investors who recognize the potential in a family business and wish to help it develop or expand. 

Family members play a crucial part in family businesses; they are the cornerstones of this little or large family business. In the world of family businesses, there are high stakes, substantial risks, and convoluted rewards. If you work in a family business or are thinking about establishing one, you’re in for a wild ride. It is a mixture of a complex network of decisions and behavior at work, involving family dynamics, business strategy, and personal relationship.

This blog will look at family members’ roles as investors in family enterprises and give ideas for maximizing rewards while avoiding risks. It will go over the significance of family members as investors in terms of good communication with investors. And at the end, there would be case studies of certain family businesses that are serving as models for those just getting started.

But for a start, we need to understand the importance of family members as investors in the family business. 

Importance of Family Members as Investors 


Importance of Family Members as Investors 

For various reasons, family members may be valued investors in a business.

  1. Interest- They may have a vested interest in the investment’s success since they are investing in a family member’s business or initiative. This can result in increased dedication , engagement, trust and understanding between the investor and the entrepreneur.
  2. They are Ready to take Risk- Family members may be more ready to take risks than other investors since they have a longer time horizon and are more patient in seeing a return on their investment.
  3. Best Advisor- Family members may be able to provide useful advice and assistance since they are more familiar with the entrepreneur’s aims, aspirations and the business atmosphere.
  4. Improving Family Relations- Investing with family members may help improve familial bonds and foster a feeling of common purpose, which can be financially and emotionally helpful.

Overall, family members may be useful investors for entrepreneurs, giving support, guidance, and financial resources that can aid in the growth of a business.

On the other hand, they can be a pain in your business, too; in the next section let’s discuss the pros and cons of having a family member as an investor. 

What are the Pros & Cons of having Family Members as Investors?


What are the Pros & Cons of having Family Members as Investors?

Having family members invest in your business may offer both advantages and disadvantages. Here are some of the pros and cons of having family members as investors:


  1. Trust and Support- Family members are frequently more inclined to invest in your business. They may be more likely to offer emotional support and counsel when things go rough.
  2. Flexible terms- Family members are frequently more ready than outside investors to invest on more flexible conditions, such as lower interest rates or more time to return the loan.
  3. Long-term commitment- Because they have a personal stake in your success, family members are frequently more likely to persist with your business through thick and thin.
  4. Reduced costs- Receiving finances from family members may be less expensive than other financing sources, such as bank loans, because there may be no need to pay interest or other expenses.


  1. Relationship Strain- If the business does not work properly or if there are disagreements about the business’s direction, it can affect family relationships.
  2. Interference in management- Family members who invest in your company may assume they have a right to say how it is run, which can lead to disagreements and disputes.
  3. Loss of control- If family members invest a significant amount of money in your firm, they may expect to have a say in crucial business decisions, restricting your influence.
  4. Lack of professionalism- Mixing family and business can often lead to a lack of professionalism and commercial discipline, which can be harmful for the organization in the long run.

Ultimately, having family members as investors might be a smart option for certain entrepreneurs, but before making any decisions, it is critical to thoroughly analyze the possible positives and negatives. It is also critical to be distinct.

So, let’s deeply dive into the techniques we should consider while investing in a family business.

Strategies for Family Members as Investors


Strategies for Family Members as Investors

Here are some investment methods for family members:

  1. Begin Small- Investing may be intimidating, especially for beginners. Family members can begin with low-risk investments such as mutual funds or exchange-traded funds (ETFs). This will help them gain confidence and progressively expand their investment portfolio.
  2. Have a Contingency Plan- A contingency plan is essential in an unforeseen catastrophe, such as a job loss or a medical emergency. Family members should have an emergency fund of at least six months living expenses. This can save them from liquidating their investments or incurring high-interest loans during a downturn.
  3. Get Professional Advice- Investing may be complicated, and family members may lack the information or skills to make sound financial decisions. Getting expert financial guidance can assist family members in making educated investment decisions that align with their goals and risk tolerance.
  4. Rebalance your Portfolio Regularly- Family members’ portfolios might become imbalanced when investment values vary. Regular rebalancing can assist them in maintaining a diverse portfolio that is aligned with their goals and risk tolerance.

Coming to the end of this blog and as we’ve discussed, investing as a family can be a great way to achieve financial goals, but it requires careful planning and execution. One way to succeed in family investing is by studying successful family businesses.

Case Studies of Successful Family Business


Case Studies of Successful Family Business

Many successful family businesses have attained long-term financial success and stability via meticulous planning, smart investments, and an emphasis on innovation. These are some instances of successful family businesses:

  1. Mars Inc. is a family-owned company best known for making sweets such as M&Ms and Snickers. On the other hand, the Mars family has invested in a wide range of enterprises, including pet care and veterinary services. Because of this diversity, the Mars family has weathered economic downturns and retained long-term financial stability.
  2. Walmart was started in 1962 by the Walton family and has since grown to become one of the world’s largest retailers. The Walton family has achieved long-term success by focusing on innovation, such as building a sophisticated logistics system to compete with internet merchants while keeping costs low.
  3. Ford Motor Company is one of the world’s oldest and most successful family enterprises. By focusing on innovation and long-term planning, the Ford family has been able to preserve control of the firm for numerous generations. For example, the corporation has invested significantly in electric and hybrid automobiles, positioning it for future success.
  4. Berkshire Hathaway is a conglomerate that controls a variety of industries, including insurance, utilities, and consumer products. Warren Buffett launched the firm after achieving long-term financial success through strategic investments and focusing on long-term wealth development.

Finally, these successful family enterprises provide important case studies for family investors seeking long-term financial success.

The Bottom Line


Investing as a family may be an excellent method to attain financial objectives, but it takes careful preparation. Family members may be essential business investors, providing support, expertise, and financial resources to help a company flourish. On the other hand, having family members invest in your firm might have advantages and disadvantages. Family members should start small, have a backup plan, seek expert counsel, and adjust their portfolios regularly to optimize returns and avoid risks. Before making any decisions, it is also necessary to properly consider the potential benefits and drawbacks and one firm can help you out in maximizing your returns and minimizing risks. 

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Ashish Verma

Ashish Verma is the founder and CTO of Secvolt, with close to 10 years of experience in the IT industry. He has been the technical backbone of the company and has worked tirelessly to make the technical infrastructure robust. He is a passionate entrepreneur who generates solutions that have the potential to bring change.

In order to ease the client’s interaction with Secvolt, he has strived to develop the business’s technological foundation and establish a user-friendly platform. Ashish has also contributed substantially to smoothening the company’s administration and ensuring that there are no lacunae in the broad structure of the organization. 

Early Years

Coming from a middle-class family, he was aware of the problems that people faced while using technology. He sought to create something that was simple to use yet had a powerful effect. As he studied computer science, he became eager to offer a solution to real issues. He began his professional career at Amdocs, where he gained expertise in client management while catering to more than 20 clients. Later, he moved to Citicorp, where he had exposure to the investment industry. His time at Amdocs and Citi enabled him to produce high-standard, efficient, and scalable technical infrastructure.

He left corporate jobs for his startup because he was passionate about working on the concept of a smart city platform. He expanded the concept internationally and even collaborated with Global Dignity-Kuwait. Things didn’t work out for him the first time. He states, “My failures didn’t stop me from experimenting and trying new things.” He rose from the ashes like a phoenix and founded FewerClicks, an End to End IT solution company.

He worked on the creation of Solster Finance, a decentralized financial platform based on the Solana blockchain. He created this platform single-handedly which has helped the team raise a $1M investment and a revenue of more than $5M within 6 months of launching. 

He has previously worked on many blockchain technologies and cryptocurrency ventures, which include Decentralized Finance Applications (Defi), Decentralized Applications (Dapps), File Contracts (SIA, record-keeper), Smart Contracts (rust, solidity), and NFT Development. His experience and effective communication have helped many team members understand Secvolt effectively and the underlying technology it is powered by.

He possesses the ideal combination of strategic thinking and excellent business insight. He is responsible for formulating technical aspects of the company’s strategy to guarantee alignment with business objectives. With his drive to experiment with new technologies, he has helped Secvolt achieve a competitive edge. Being in charge, Ashish never holds back in encouraging the different departments to make profitable use of technology, helping to grow as an unstoppable team at Secvolt!

Hanif Shaikh

Hanif Shaikh is the founder and CMO of Secvolt, with over 8 years of experience in the industry. He plays a crucial role when it comes to the growth of Secvolt. Since the beginning, he has acted as a mentor for each and every employee of the company, and he makes an effort to be accessible to his staff anytime they need him. 

Hanif first entered the Blockchain and Crypto world in 2016, and nothing has stopped him since. He views blockchain as a transparent platform that provides authority and accountability back to the people. He consistently believes that “overcommunication is better than miscommunication.” He has lived by this motto with his staff, clients, and networks.

Early Years

Hailing from Gujrat, a state in India, he is following his dream to contribute to making this world a better place. In the process, he has struggled, made some mistakes, and learned lessons from those mistakes to achieve success in life. His entrepreneurial attitude dates back to his childhood when he learned from his father’s business and aspired to have it all. He came from a humble background and had ambitions to succeed in life.

He has developed two successful businesses from scratch, and in the process, he has inspired young people to start their own businesses. He was an integral part of the Quora Mumbai Meetups and helped it become a great success in a short period of time. Later, he began organizing meetups to raise awareness about blockchain, cryptocurrencies, and their applications. He also shared his knowledge of ICOs, highlighted reputable ICOs, and established a small cryptocurrency community on WhatsApp groups.

He chose to go on a Blockchain Tour in India in 2019 and met some fascinating people. Throughout his journey, he has been able to build an extensive and robust network that has aided Secvolt’s growth. Because of his expertise and understanding of the Crypto Industry, he has been featured on several news channels and has advised the youth on the subject.

He is in charge of the company’s marketing operations and is responsible for developing its marketing strategy and vision. He oversees a group of passionate marketing professionals and plans promotional strategies with the goal of making  Secvolt a global brand. 

He is a perfect blend of a practical attitude and innovative business acumen. He believes in the ability of individuals to perform exceptionally well when given an environment to experiment and explore their passions; a culture that he has built at Secvolt.

Divakar Choudhary

Divakar Choudhary is the founder and CEO of Secvolt who has been trading for more than six years now. He started the business in 2018 with the conviction that if anybody could dominate the market, it was him. He poured all of himself into the business and turned Secvolt into a market-beating machine.

Divakar developed the fundamental quant models that perform risk management and capture alpha using his skills from the previous organization and his time spent in the market. In order to make the system effective, he backtested risk mitigation algorithms and worked on them for more than 4 years to produce results.

Early Years

He began his crypto journey in 2013 after getting his first gaming Laptop and melded in with the Blockchain community like sunbeams on the ocean. He created many YouTube channels at the age of 15 and businesses by the time he was 17. Technology has always piqued Divakar’s interest. He endeavored and succeeded at freelancing in his effort to achieve financial independence. However, he soon realized that freelancing would always keep him in the rat race, and the only way out would be to build a machine yielding generational wealth.

Soon, he started trading using his own capital but suffered a loss in the market. He says, “95% of people lose money & the rest 5% make money from the loss of those 95%.” He then began working on an effective technique to be included in this 5% after losing part of his own assets during the early stages of trading. He began evaluating quant strategies using statistical models.

With his methodology, he once produced a 20% ROI in a single month. With the zeal of creating something exceptional, he borrowed money from friends and family and generated decent returns for them using primitive quant models. Month after month, the system’s efficiency and the competence of the man behind it allowed for excellent market returns.

In the beginning, Divakar worked on his laptop for over 18 hours. It took every ounce of his energy as he executed about 530+ deals daily for 4 years to create this company from the ground up. In 2021, he increased his volume by 827%, trading a total of $52 million and hitting a single account.

In his words-

“What does becoming “THAT” GUY mean to you? Who did you need when you were young? Be that person!”

He is a perfect example of someone who followed his passion and made a fortune from it! He dreamt of creating generational wealth as a youngster, envisioned it as an adult, and is now making it a reality with Secvolt!