Private Wealth Emerges as a Force in Mega Deals

As capital floods into artificial intelligence and alternative assets, a growing share is coming not from pensions or sovereign funds, but from families. PCM Encore, the recently launched wealth advisory spun out of Founder and CEO Michael Paulus’ family office, is explicitly focused on expanding private wealth access to alternatives. 

The firm’s participation in OpenAI’s latest $40 billion funding round gave clients exposure to one of the highest‑profile AI deals to date, underscoring how family offices and sophisticated private investors are starting to appear on the cap tables of marquee transactions.  

Paulus is watching in real time as the private wealth channel gains influence across mega‑rounds, private equity and late‑stage growth capital—and as family offices position themselves to be long‑term winners in this shift.  

CM: More mega‑rounds in AI and tech now include family offices and private wealth capital. How has the role of the private wealth channel evolved in these headline deals?  

MP: Private wealth has been a much more active participant in mega-tech rounds due to a number of converging dynamics. The most important is private wealth’s increasing recognition as a fundraising channel for traditional venture/growth investors. Investors are structuring vehicles intentionally with private wealth in mind. However, from our perspective, not all opportunities for private wealth clients to participate are created equal. Given the scarcity and demand for high-growth deals like OpenAI and Anthropic, SPV opportunities increasingly bring high fee levels or carried interest attached. 

CM: You’ve scaled to over $1.7 billion in assets since initial SEC registration in October 2024. What has resonated most with clients in your approach?  

MP: We’ve developed a suite of family office services, which originated directly from the approach I take for my own family’s capital and seem to really resonate with the needs of our clients. We began by building out our own direct investments arm, enabling us to offer unique investment opportunities to clients that are difficult to come by at other RIAs and wirehouses. These are often deals that my team sources and structures directly, leveraging in-house private equity investment experience at firms like KKR.  

We’ve also built our own CPA Firm, PCM Tax, a separate but affiliated entity under common ownership, which allows us to provide an end-to-end tax advisory and filing service to our clients who elect to add this additional service. In most cases, wealth managers cannot advise directly on tax and estate. We believe devising our strategies holistically, with tax and estate coordination through qualified partners, gives our clients the capability to unlock meaningful alpha generation. We hear from clients that this is a real differentiator. 

CM: When you look across private equity and late‑stage growth, where is private wealth capital having the most influence on how transactions get structured and priced?  

MP: Transaction pricing and structuring is still largely driven by institutional investors who are leading rounds (especially in later-stage rounds), but we are increasingly seeing large family offices take an active role in these mega-rounds. Technology has minted many wealthy founders, and we anticipate an increase in the number of family offices of prominent tech entrepreneurs backing and leading new businesses.  

As more capital floods the tech ecosystem, founders often seek to add former entrepreneurs at the board level for advice and guidance, further widening the opportunity for private wealth capital to participate in these prominent rounds. It’s about adding unique value beyond capital, which is currently abundant. 

CM: How are you framing AI exposure for families—both in terms of concentration risk and where it fits inside a broader alternatives allocation? 

MP: On the public equities side, we employ an index approach where we prioritize generating alpha through effective tax strategy, rather than individual stock picking alone. Direct indexing forms the core of our portfolios. The advantage of this approach is that, by its very nature, it provides exposure to top publicly traded AI innovators like NVIDIA, Meta, Amazon, etc.  

On the private market side, we are interested in AI as a satellite strategy to complement the core portfolio. For clients exhibiting a greater appetite for risk and who successfully complete a suitability assessment, that might mean investing directly into AI/technology growth deals that our Direct Investments team helps source, underwrite and advise on. For risk-averse clients who still want AI growth exposure, we believe there are many adjacent sectors that still provide strong, risk-adjusted exposure, such as digital infrastructure. 

Generally, we view infrastructure as an attractive sector with long-term fundamentals, where fewer wealth managers have allocated their clients thus far. Data center deals, for example, are signed with long-term contracts and built in price-escalators, providing high cash-flow visibility backed by some of the largest companies in the world that are seeking to invest behind AI. 

CM: Why do you think family offices have become such a popular—and effective—model for sophisticated families over the last decade?  

MP: The family office model provides clients with the best of both worlds in our view. They are getting the attention and white-glove service of a boutique organization, while gaining the benefits of and access to co-investment with a family office’s principal on deals that might not be available elsewhere. We custody with Morgan Stanley, one of the world’s largest financial institutions, so our clients receive a large-scale offering and infrastructure, while simultaneously having a boutique investment and advisor team managing the relationship directly.  

Our investment team frequently reviews outside investment opportunities, and we always account for clients’ full financial pictures and balance sheets, which is a level of service we don’t believe many others are providing. We pride ourselves in being fiduciaries. 

CM: Looking ahead five to ten years, how do you see the private wealth channel shaping the future of capital allocation across AI, private equity and other alternative asset classes?  

MP: Alternative assets have carved out a huge portion of the economy largely on institutional capital. While institutional capital will continue making up a large portion or even the majority of alternative asset managers’ AUM for the foreseeable future, we fully expect private wealth to become a more active participant and exert more influence on markets generally. As retail investors become wealthier and more sophisticated over time, we expect a step change in popular demand to diversify into “endowment-style” asset classes beyond just traditional stocks and bonds.