When heirs become entrepreneurs
The transfer of wealth between generations is about more than just preservation. It also forces entrepreneurial families to make a decision: where should capital be deployed in future? Wealth that was built up through entrepreneurial risk must be invested according to different rules once it becomes part of a portfolio.
Listed equities and bonds usually provide the foundations. Private markets expand this spectrum to include companies that are not yet traded on a stock exchange. Entrepreneurial families are familiar with this world.
They know from their own experience how long growth lasts, how uncertain the path to it can be – and also that capital alone is not enough to build a business.
Innovation before flotation
Private markets include investment classes such as private equity, private debt, real estate and infrastructure. Private equity enables investments in unlisted companies at different stages of development, and can therefore form a component of a long-term asset allocation strategy.
Not every good company is automatically a good investment.
Within this spectrum, venture capital is a special type of private equity. Its focus on young companies and on new technologies and business models means it has a different risk/return profile from traditional private equity strategies. It is therefore crucial to determine what role venture capital should play within the overall assets – and how large this component can be when asset structure, liquidity and risk tolerance are considered.
In Switzerland, there is a clear interest in early-stage participation in innovation. Robots, therapies and energy-saving chips are being created in the laboratories of ETH Zurich and EPFL. According to the Swiss Deep Tech Report 2026, between 2020 and 2026 around 63% of Swiss venture capital went into deep tech – the highest proportion in the world. In 2025, such financing reached a record USD 2.6 billion; the capital invested has thus risen about fivefold inside a decade.
Yet an innovative technology is not automatically a good investment. Prototypes may fail, while funding rounds may be delayed and valuations revised downwards.
The returns on venture capital funds are very unevenly distributed and the capital remains tied up for years. Furthermore, due to what is known as the J-curve, investments may initially yield negative returns for several years before they begin to show any positive performance. So it is not a case of shunning innovation but rather of funding it with sufficient time, cash reserves and diversification.
Role within the portfolio
Venture capital tempts the investor to focus on individual cases: an excellent founding team, a breakthrough in the lab, an apparently limitless market. Stories like these are enticing. The vital question for investors, however, is not so much which start-up is the most successful, but the role played by venture capital in their overall portfolio.
A solid investment foundation is built up over several years and across regions, sectors and managers. The latter also combine fund investments with selected co-investments and plan capital commitments and reserves in advance. There is another factor to be taken into account for entrepreneurial families: the family firm often ties up a large portion of the assets, thus concentrating the very entrepreneurial risk that is supposed to be so carefully managed in the rest of the portfolio.
This places the spotlight on manager selection. It is not only historical returns that are crucial, but also strategy, decision-making processes, evaluation practices, reserves for follow-on financing, governance and operational support. Pictet has been investing in private equity since 1989. Its experience across different strategies and market phases is used to rank specialist managers and define their respective roles in the portfolio.
The path to the global market
Swiss deep tech has attracted international attention for a long time now. For funding rounds exceeding USD 100 million, 88% of the capital comes from abroad according to the Swiss Deep Tech Report 2026. This shows Switzerland’s international appeal – while also revealing a gap. During later growth stages, there is often a shortage of domestic capital in the necessary amounts.
However, the bottleneck is rarely just financial. The path from prototype to global company requires industrial customers, regulatory experience, specialist managers and access to international markets. Good venture capital managers bring such resources together and help companies navigate the challenging transitions between research, market entry and scaling.
A network is especially valuable when it provides access to industrial customers, senior managers, markets and specialist knowledge. The vital factor is not the number of contacts, but whether the right partners are reached at the right time.
To that end, Pictet brings together entrepreneurial families, investment partners and founders, and utilises the Group’s international presence to make relevant contacts. This type of network can be especially useful in private markets, where information and access are unevenly distributed.
Knowledge is also an important part of access: How are valuations made? How robust are intellectual property rights? When is a fund or a co-investment more suitable? Someone who understands how these things work is better placed to weigh up the opportunities and risks.
Capital across the generations
For the next generation of entrepreneurial families, this holds a special appeal. They often discover new technologies and business models at an early stage, whereas the older generation contributes its experience of building up a company, overcoming crises and dealing with financing. In the best case scenario, technological curiosity combines with entrepreneurial judgement. Both perspectives can help each generation to recognise the other's blind spots.
A clearly delimited venture capital component may thus turn into a learning opportunity for the family. The younger generation analyses opportunities, meets founders and gradually takes on responsibility. The older generation does not need to evaluate every technology itself, but should give its support regarding budgets, areas of responsibility and decision-making rules. Governance thus acts as a guardrail rather than a brake.
In this way, a joint venture investment can achieve more than simply returns. It creates a common language for risk, responsibility and the long-term focus of the family's assets. However, enthusiasm should not be confused with conviction. A sound investment case can only be developed once assumptions have been tested, risks identified and decisions considered jointly and documented.
There is no single way to implement it. Funds provide breadth and access to a larger number of companies; co-investments enable more targeted investments, but require additional due diligence and increase the individual risk. The key factor is whether the chosen combination actually fulfils the intended role within the family’s portfolio of assets.
Private equity and venture capital are therefore long-term components of disciplined asset management, rather than an alternative to it. Venture capital has particular characteristics: smaller, riskier and less accessible, yet at the same time closer to the ideas from which new companies or even industries can emerge.
Switzerland will continue to invent. Not every invention will be a winner, and not every good company is automatically a good investment. For investors, the art does not consist in predicting the future; it consists in building a portfolio that can accompany selected companies on their path into the future over the long term.
