A transaction is strongest when company quality, sponsor alignment, rights, and fit with the rest of the portfolio all support the same investment case. The process follows public source materials. Signed documents and investor circumstances control the actual terms.
Family Office Co-Investment Checklist
A transaction is strongest when company quality, sponsor alignment, rights, and fit with the rest of the portfolio all support the same investment case.
View chart data and assumptions
| Review area | Fit with the rest of the portfolio | Sponsor | Company | Rights |
|---|---|---|---|---|
| Fit with the rest of the portfolio | Primary | Review | Context | Context |
| Sponsor quality | Review | Primary | Review | Context |
| Company risk | Context | Review | Primary | Review |
The Decision Begins Before the Offer
A co-investment leaves the family exposed to a company, even when a trusted manager brings the offer. Company quality, price, terms and the sponsor's interests all affect the result. Existing holdings determine whether the deal adds a useful exposure or more of a risk already held.
FINRA's private-placement guidance provides a useful public reminder that reasonable inquiry covers both the issuer and the offering. For a family office, that means understanding the business and then tracing what the proposed security actually delivers.
The documents are connected. NVCA lists five core financing documents for many venture rounds. A right that appears attractive in the term sheet may be qualified elsewhere in the same transaction.
An offer may arrive on Friday with an answer due early the next week. If review roles and the minimum evidence are already agreed, the team can use that short window to assess the company and terms. Otherwise, part of the deadline is spent deciding who does the work.
1. The Effect on the Family Portfolio
For a $500 million investable portfolio, a 2% co-investment is $10 million and a 3% position is $15 million. Those dollar amounts show the loss at stake more clearly than the percentages alone.
The family's stakes through funds and other vehicles add to its direct holding. Together, they show whether the proposed cheque serves a new purpose or adds to a risk already held.
The loss the family can bear limits the position size. A later round at a higher valuation can make the stake a larger share of private NAV without returning cash, increasing its weight in the portfolio.
2. Why the Sponsor Wants a Co-Investor
A standard NVCA venture financing uses 5 linked core documents. Rights can depend on provisions across all five, which is why the term sheet alone gives an incomplete view.
The sponsor may share a deal because the round is larger than the main fund can support. The company may also want a strategic shareholder. The lead's security, price and capital commitment help explain how that rationale relates to the offer made to the family.
References reveal more when they describe difficult periods. A sponsor's response to missed targets or an urgent financing gives the family evidence about the partner it may rely on for years after closing.
3. The Company's Need for More Capital
Carta reported a record 856-day median gap between Series A and Series B in Q2 2024; roughly 2.3 years before allowing for an interim bridge.
Customer demand connects the product to a repeatable business. The central questions are what problem customers pay to solve and what evidence shows they stay. Revenue quality answers more than a long list of market statistics.
The burn rate determines how long the company has to reach the milestone for another financing. If cash runs out first, an interim round becomes part of the investment case. The current cheque may therefore be only the beginning of the funding path.
4. How the Security Determines the Return
In Q1 2026, the US median Series A pre-money valuation reached $62 million and the median deal size $19.6 million.
Post-round ownership connects valuation to the actual security. Payment priority at a weak exit and dilution from later rounds determine what that stake may return.
An SPV's fees and carry reduce the family's proceeds and may make its return differ from the lead investor's. A discount to the last round offers useful context only when that round still reflects the company's prospects and share rights.
5. The Risk of Adverse Selection
An offer does not by itself prove the manager's conviction. The main fund's stake and any exposure limit help explain why co-investors are involved. They can reveal whether the manager is sharing an attractive opportunity or shifting risk away from its fund.
6. What Follow-On Funding Could Require
The initial cheque may be the first of several requests before a company can fund itself or exit. Operating progress and later terms shape the case for each new investment. Without fresh evidence, protecting the first cheque can become the main reason for the next.
Declining to join a later round can dilute the family's stake or affect its rights. A longer hold and a lower-priced round can also arrive together, compounding the downside.
Decision Memo Checklist
- What does the position add to the total portfolio?
- What independently supports the sponsor's investment case?
- What does the family office actually receive?
- What is the adverse case, and can the office absorb a full loss?
- Who provides the information, how often does it arrive, and what legal obligation supports it?
The memo connects the decision with the evidence: why the deal belongs in the portfolio, what could undermine the thesis and who monitors it after closing. The articles on private technology co-investments and co-investments versus fund investments explain that wider portfolio context.
Adobe-Figma: Closing Risk After a Signed Deal
The proposed $20 billion Adobe-Figma sale appeared to offer an exit in 2022. In December 2023, the parties ended the deal. They had concluded there was no clear path to approval from regulators.
Adobe planned to pay with cash and stock, which made the proposed route to liquidity concrete for Figma shareholders.
The announced price came with operating evidence: more than $400 million of expected ARR and net retention above 150%.
The price and business metrics did not ensure the deal would close. With no clear route to approval, the parties ended the agreement. Each company continued on its own.
A signed acquisition still depends on approvals, financing and closing terms. Termination rights determine what happens if the deal fails. The company's standalone capital needs remain relevant while investors wait for the sale to close.
Primary sources: Adobe, proposed Figma acquisition (2022); Adobe and Figma, termination announcement (2023). The Adobe-Figma transaction is cited from public records and is unrelated to Frontierspace performance.
Frequently Asked Questions
What is the main portfolio risk in a family office co-investment?
The main risk is usually too much money in one company. That company can become a large share of private NAV, especially when the family also owns it through funds and other vehicles.
How should a family office evaluate the co-investment sponsor?
The specific transaction reveals more than the sponsor's reputation alone. The reason for the allocation, the sponsor's investment and its terms show how interests compare. Its role after closing and references from difficult periods help explain the support the family can expect.