The Great Indian Family Offices Fatigue

Some insights from our recent conversations.

I met with an investor yesterday. He's a thin, sharp, serious-looking, 35 year old guy, who has been investing his family wealth into private markets since 2018. On LinkedIn, he calls himself an angel investor, having directly or indirectly invested in more than 250 startups. He told me he has also been allocating to a wide range of AIFs across pre-IPOs, real estate and private credit, all backed by well-known sponsors. He’s had some hits and misses in startup investing but on the fund allocations, disappointment is widespread. 

At one point during the conversation, he pulled out his laptop and showed me a spreadsheet. It wouldn’t load using the public wifi…quite an extensive work. It was a holistic comparison of multiple investible indexes filtered out using his criteria, with data going back 30 years (either live or simulated). The band of rolling returns over a long period of time (>20 years) was between 9% on the lower side and 22% on the higher side. He had done some scenario testing as well…what if you entered the markets just before the 2008 crisis, returns still converged to ~12% over time…he took me through it all. He is convinced that these results will also hold up in the future. He’s now reallocating the distributions coming out of his private market investments into his index-based strategy. He’s had a full cycle of experience in private markets, and the outcome didn’t match the promise. He says he’ll still allocate 5-10% to private markets, just with the hope of an outlier and to be a part of the conversations at clubs…but nothing more. 

He mentioned a pre-IPO fund his banker pushed him into, pitched at 20–25% IRR. The returns today are below a fixed deposit. Real estate AIFs? Same story. Extended timelines, vague reporting, and very little to show for the illiquidity. He’s stopped looking at new AIFs.

He’s not the only one feeling this way.

Executives from four different family offices said many of their investments are in the red or have been written off. The people, who asked not to be identified because the information is private, outlined a list of issues in their dealings with alternative investment funds. They included fund managers changing fees at the last minute, repeatedly extending fund tenures and not returning money on time, and downplaying the risks of high-yield debt.

- Bloomberg article titled ‘India’s Family Office Boom Is Littered With Deals Gone Bust’

Another family office I personally spoke to has a five-person investment team. They’ve completely paused new allocations. They also asked us not to use their name in any of our reports/articles. They don’t want a surge in inbounds/dealflow. They’re not taking meetings, not entertaining new funds…right now they’re sitting on cash and re-evaluating their approach. 

Yet another family office was more blunt. They’ve lost trust in how some GPs are managing extensions and rolling structures. Continuation vehicles, in their words, are just recycling machines. They’re out of the venture asset class entirely. They think too much of the current fund ecosystem is built around fees, not outcomes.

Concurrently, in the latest Taghash VC Survey Report, we noticed GPs talking about this shift too. Domestic LP formation is slowing down. First-time funds and micro-VCs are finding it hard to close. 

So what’s going on?

Here’s what we’re hearing again and again:

• Many LPs who entered private markets after 2020 lacked a clear understanding of how these structures operate. A significant portion were first-time allocators, often single-family offices led by next-generation heirs…introduced to the asset class through private bankers or advisors. They were sold on the idea of high returns, diversification, and access, but were unfamiliar with the underlying mechanics. Most had little exposure to how capital calls work, how long exits can take, or how unpredictable distributions can be in real terms. What they encountered instead was an asset class that requires patience, structure literacy, and a clear appreciation for risk duration. They didn’t anticipate how IRRs can be theoretical for long stretches, or how performance is uneven and heavily dependent on fund vintage, sector, and timing.

• Much of this capital got deployed during the 2020–2022 window, when fundraising across private credit, venture, and real assets was at its peak. As a result, many family offices ended up with concentrated exposure across similar vintages and overlapping strategies. What seemed like diversification at the time has ended up clustering around a narrow band of market optimism. Now that many of these funds are in the middle of their cycle without meaningful distributions or realizations, investor fatigue is growing.

• Liquidity expectations haven’t been met. Fund terms are getting extended. Redemption windows have shifted. Rolling funds and continuation vehicles are increasingly being used. LPs who expected a structured path to liquidity are now finding themselves locked into longer-than-expected cycles, often without clear communication on timelines or exit strategies.

• The market itself is saturated with funds that look and sound similar. Managers are offering overlapping strategies, often within the same stage or asset class. Differentiation has become difficult to evaluate. For many LPs, especially those seeing multiple decks each week, the messaging feels repetitive. Pitches focus more on branding and momentum than on what’s structurally different or better.

• Sales-led distribution is also a part reason. Many funds are still marketed through placement agents or intermediaries whose incentives lie in upfront commissions. In several cases, investors feel that more effort went into selling the fund than into delivering long-term outcomes. The advisory layer has been weak. LPs who needed education or context around the risks often got ‘sold’ into something they didn’t quite understand.

• NAVs are marked to model, often lagging or inconsistent across quarters. Portfolio updates vary from manager to manager, and in some cases, LPs report minimal visibility into portfolio performance or company-level details. Without that clarity, it becomes difficult to assess how risk is evolving or whether the fund is tracking anywhere close to its target.

These experiences have led many family offices to step back. They haven’t left private markets entirely, but they’ve become far more selective. They are still open to backing good managers…They’re just asking more questions, pushing harder on alignment, and delaying commitments. The capital is still there…what’s changed is the level of conviction and the threshold for saying yes.

Let us know your thoughts.