Fund Structure
Co-Investment
Last updated
Quick Answer
Direct investment by an LP alongside a VC fund in a specific portfolio company — often offered as a perk to large LPs.
Co-investment allows LPs to invest directly in individual portfolio companies alongside the main fund, usually with reduced or zero fees and carry. For LPs, co-investment offers: direct exposure to specific companies they're most excited about, lower effective fee loads (since fees/carry are waived or reduced), and higher potential returns on concentrated positions. For GPs, co-investment offers: ability to do larger deals without straining fund concentration limits, a way to reward top LPs, and relationship building with valuable capital sources. Co-investment rights are a negotiating point — large LPs often receive pro-rata co-investment rights as a condition of their commitments. The co-investment market has grown significantly, with dedicated co-investment funds and platforms emerging.
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Further Reading
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Comparisons
Careers That Use This Term
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Frequently Asked Questions
What is Co-Investment in venture capital?
Co-investment allows LPs to invest directly in individual portfolio companies alongside the main fund, usually with reduced or zero fees and carry. For LPs, co-investment offers: direct exposure to specific companies they're most excited about, lower effective fee loads (since fees/carry are waived...
Why is Co-Investment important for startups?
Understanding Co-Investment is critical for founders navigating the fundraising process. It directly impacts deal terms, valuation, and the relationship between founders and investors.
What category does Co-Investment fall under in VC?
Co-Investment falls under the fund-structure category in venture capital. This area covers concepts related to how venture capital funds are organized, managed, and governed.
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