“Being an outsider, as long as you can maintain independence and build relationships with different family business stakeholders, can really help with solving problems. It’s like being an honest and trusted umpire!”
Pascal Levensohn’s career has been defined by resolving risk and conflict.
A Harvard alumnus with an A.B degree in Government, he went straight into the finance business two weeks after graduation, joining the Bankers Trust Company training programme. He transitioned from banking airlines and aerospace companies into the equity risk arbitrage business at the First Boston Corporation, a timely career shift coinciding with the beginning of the bull market in June 1983.
Later, having anticipated the 1987 Black Monday stock market crash, he was promoted to head the Risk Arb desk. In late 1988, Levensohn left First Boston to join a private partnership which managed all of the assets of the Progressive Insurance corporation.
Disillusioned with the short-term investing horizon endemic to the Wall Street culture, he left New York in 1990 for the West Coast to work with Richard C. Blum, husband of then San Francisco Mayor Dianne Feinstein.
“Blum was interesting to me because he was among the first wave of activist investors willing to take significant minority stakes in publicly traded companies. He championed working constructively with management to maximise long-term shareholder value,” says Levensohn. “That was several steps away from risk arbitrage, which is a largely short-term, passive activity.”
Levensohn explains, “In the early 90s, San Francisco and Silicon Valley still existed in parallel universes; the internet had yet to transform the planet through its first killer app: email. I was extremely attracted to the entrepreneurial culture in Silicon Valley and met both brilliant entrepreneurs and established VCs. These were my neighbours, and many became my friends.”
At the age of 33, Levensohn left the Blum firm and became an entrepreneur himself. His eponymous firm has now been going for almost 30 years.
I'm an absolutist in believing that there is a right way and a wrong way to do things.
After “Two and a half years in the wilderness”, Levensohn’s direct investing and advisory business obtained the support of the storied multi-generational Hixon family as his cornerstone backers, a relationship that continues today.
“The Hixons set the template for the rest of my career. I became their chief investment officer, chaired the family office meetings, developed the family’s asset allocation model, managed the family office staff, selected other advisors and fund managers, and established a direct venture capital investment portfolio for the family that I managed at my discretion.” says Levensohn.
Some of the most interesting and rewarding work of his life came early in that relationship, as the normally low-profile Hixon family made the front-page of the Wall Street Journal during the 1999 hostile takeover of AMP corporation, which the family co-founded in 1943. AMP was ultimately acquired by Tyco International, but that was hardly the end of the story. The saga culminated in 2008 with the successful private lawsuit which Levensohn championed on behalf of certain Hixon family members against Tyco International and former CEO Dennis Koszlowski, and whose results were publicly disclosed in SEC filings.
“For me, it was a David versus Goliath experience,” says Levensohn. “Taking on Tyco showed me that you must be committed to do what's right. I'm an absolutist in believing that there is a right way and a wrong way to do things and that, even though we see miscarriages of justice everywhere, this does not mean that we should abandon our faith in justice. The Tyco experience really cemented the important principle of accountability.”
So began a hugely successful calling, working with some of America’s most famed family office-fuelled venture capital firms, long-term relationships now anchored by the Dolby Family and including Susman Ventures, Arden Road Investments and the Gideon Hixon Fund. From an early stage, Levensohn’s no-nonsense outsider approach has proven to be a hugely fruitful strategy.
“As a family advisor, I have always been clear that if you disagree with what I'm suggesting, you don't have to do it,” he says. “I have also deliberately structured my advisory assignments based on mutual trust, so that if the family is not happy with my work, they can terminate me at any time. This has been a successful model.”
Having navigated the tech bubble burst in 2001, the mortgage meltdown/Lehman Brothers crash in 2008-2009, and the unexpected death of one business partner and the forced retirement of another following a disability diagnosis in 2008-2009, Levensohn repositioned his firm to work exclusively with single-LP venture funds since 2012.
“I get incredibly upset when I see wealthy families, especially young people, victimised by grifters and con artists. Family members who grow up in privilege can often have a blind spot in terms of identifying bad actors. My bad actor radar is always on!”
With a growing reputation for helping families build successful direct VC investing platforms, Levensohn began working with the Dolby family in 2012. He helped to mould their direct VC activities into a truly unique proposition that manages to be at once forward-thinking and honours the legacy of the visionary inventor and extraordinary businessman, Ray Dolby.
“Dolby Family Ventures is designed as a professional, institutional venture fund that supports entrepreneurs through the challenges of the early stage,” says Levensohn. “Under the leadership of Ray’s youngest son, Dave Dolby, we represent patient capital dedicated to funding breakthrough innovation across multiple financing rounds, qualities that make us very attractive to emerging companies. As a family organisation, we can make ‘Yes-or-no’ decisions much faster than many large VC funds.”
I can never lose sight of the fact that I'm here to serve these families in the manner that resonates with them.
Self-described “As an early-stage venture firm focused on building great technology companies… honouring the legacy of Ray Dolby and his commitment to engineers and their vision to solve the world’s toughest problems,” Dolby Family Ventures was formed in honour of a man who had very strong principles. Working with families on how to best align founder vision and values with solid investment opportunities is, says Levensohn, a hugely important part of the development process.
“We have a disciplined structure, and we manage risk very carefully,” he says. “That means we look at capital concentration, company stage, and absolute valuation. We function very much like an institutional fund, and we do very thorough due diligence on our companies.
We co-invest with top global funds, and we have a long history of leadership in professional venture capital organisations, ranging from the National Venture Capital Association to the Kauffman Fellows Program.”
“Before we bring anyone new onto the team, we ensure they understand exactly what the family's priorities are and that there are no conflicts between the professional’s priorities and the family’s,” says Levensohn. “For example, in the case of the Dolby family, our biotech investments, which account for roughly one third of our total activities, are exclusively in the field of neurodegeneration. Over time, that focus has branched into three sub sectors: Neuromodulation, Clinical Depression, and disease modifying therapeutics for Alzheimer's Disease. Because the family has defined these themes as focal impact areas, our biotech team is led by PhDs who are experts in this field.”
“I can never lose sight of the fact that I'm here to serve these families in the manner that resonates with them.”
Levensohn’s father died when he was just 14 years old, unexpectedly leaving him to become head of the family and having to learn how things are done the hard way. Nevertheless, he put himself through education (“I had zero financial aid at Harvard,” he says) and got to work at an early age. As a result of this seismic upheaval in his early life, Levensohn has a deep understanding and empathy for next-gens.
“Next-generation family members need to feel comfortable about change,” he says when asked about younger people being more open to taking advice from external advisors. “Are they willing to go outside of their comfort zone? And are they aware of their own limitations?”
“These seem like soft skills, but they're not. I think they’re fundamental because the venture capital business is a people business. The simple question every venture capitalist must ask themself when sitting across from entrepreneurs is ‘Are you actually going to be able to do what you claim you’re going to do?’ As a professional director, my job is to really make a difference for start-up executives, especially in helping first-time entrepreneurs avoid many common mistakes that experienced investors experience see far too often.”
Levensohn’s personal remove from the family dynamic has been a boon to his professional success, allowing him to advise with a cool head and calm demeanour. His extensive experience in venture capital is another feather to his bow, as VC continues to be a strong draw for family offices. Campden Wealth’s 2022 North American Family Office Report found that nearly two thirds of family offices invest in venture capital (61%) and nearly half in direct venture (49%). “The appeal of VC to family offices is clear”, says Levensohn, “although there are risks they may find tricky to navigate”.
“You're investing in innovation, which drives the US, and increasingly the global, economy,” he says. “You can also invest in innovation sectors that are not only profitable, but that resonate with families, such as climate or medtech. While the venture asset class has been shown to be successful, I think the mistake most family offices make is that they don't follow a portfolio approach. They might not necessarily understand the concentration risks associated with doing just a couple of investments, and they often don't do due diligence, or they don’t know how to harness the resources to do due diligence.”
Becoming an expert in anything you do takes a huge amount of effort, dedication and time.
Levensohn operates on a level of honesty, openness and trust that has served him well in the family office space. “I can relate very much to first-generation entrepreneurs because I built my entire platform,” he says. “And I can relate very much to next-generation family members because I've always had the same wish for mentorship in my own life.” But he’s not afraid to tell it like it is to all branches of the family tree.
“Years ago, I was made chairman of a large family company in the United States, but the family members didn't want to take advice from me and three other independent directors,” he says. “They didn't want to help themselves; they didn't want to change. All four of us quit on the same day and left the family to their own devices. The moral of the story is, you can’t help people who don't want to help themselves. A critical element of any entrepreneur for me is, are they coachable? Are they willing to help themselves by listening to outside input?”
“I advised another family for ten years. The father had been through a very public trauma with his own family. He was convinced that all his children were doomed to follow in his experience and, because they were very wealthy, this was going to poison the family. I suggested to the patriarch: ‘Your fundamental assumption may be incorrect’ and recommended that we establish a family philanthropy fund and give the children the responsibilities for administration, grant making and grantee oversight. This completely changed the family’s dynamics and redefined the way the father felt about his kids. He now had an opportunity to see that they could be responsible stewards and that they also shared his strongly held morals and values. That was just a different way of empowering the kids while breaking with the past.”
A strong believer in paying dues and gaining experience, Levensohn’s work ethic has led him to an enviable level of achievement, and he firmly believes that hard graft is responsible for that success.
“There are no shortcuts to achieving mastery and domain expertise,” he asserts. “Becoming an expert in anything you do takes a huge amount of effort, dedication and time. You must pay your dues. You need to go through this crucible in life to really achieve.”