How Family Offices Use Co-Investments?
Goldman Sachs' 2025 family-office report shows family offices maintaining real private-market investments while adjusting allocations selectively. Co-investments can add control and precision. They may help a family office express a specific thesis, increase exposure to a known company, or reduce blended fee drag. The benefit depends on internal staff and time for review, conflict review, concentration limits, and the ability to act within the deal timeline.
Co-investments are often evaluated against the traditional 2 and 20 fund starting point, but fee savings only matter if company-level risk is acceptable.
A family office may be offered a co-investment because it has built a trusted relationship with the lead manager. That access is valuable, but it should not turn every allocation into an obligation to participate. The office needs a repeatable way to decline opportunities that do not fit the company view, price, or concentration limit.
Co-Investments Add Selected Company Exposure
Family offices use co-investments to add more capital to selected companies alongside a trusted manager. The route can provide company visibility, larger ownership, and lower economics than a normal fund commitment. It also adds concentration and requires a decision on a shorter timetable.
| Use | Possible benefit | Main control |
|---|---|---|
| Add conviction | More exposure to a company the family understands | Company and sector limit |
| Use operating knowledge | Family can help with customers, hiring, or markets | Clear role and conflict review |
| Improve blended economics | Lower fee or carry in some vehicles | All-in cost and independent investment case |
The family should understand why the manager is sharing the deal, how much the main fund owns, who leads governance, and whether the co-investment receives the same security and price. A strong relationship improves information and execution, but the family still needs its own sizing decision.
Protect the Core Programme
One attractive company can absorb capital reserved for fund re-ups and later vintages. The family should set a separate co-investment budget and allow it to remain unused. Direct company exposure should be aggregated with every fund and SPV holding the same business.
- Company quality: Customers, economics, team, and financing risk.
- Entry terms: Valuation, share class, preference, and rights.
- Sponsor alignment: Capital invested and governance role.
- Portfolio fit: Company, sector, and manager concentration.
- Whether the family will follow on.
Co-investments should make the family programme more selective, not simply more active.
Recent data helps put the point in context. UBS reported 54% of surveyed US family-office portfolios in alternatives, including 27% in private equity and 18% in real estate.
A co-investment lets the family review the company, price, and security before committing capital. It can also help the office decide where to add new private-market exposure rather than leaving every allocation decision to a pooled fund.
Manager relationships mean working more closely with sponsors around specific opportunities. Before proceeding, the investor should build relationships with founders, co-investors, and strategic partners.
Co-investments can add a focused investment, deepen manager relationships, or apply family expertise, but each use needs a position limit. Equal-area priority map. Card size does not represent portfolio allocation or expected return.
Family Office Co-Investment Use Cases
Co-investments can add a focused investment, deepen manager relationships, or apply family expertise, but each use needs a position limit.
View chart data and assumptions
| Area | Treatment |
|---|---|
| Domain fit | Review area; no weighting implied |
| Sponsor relationship | Review area; no weighting implied |
| Concentration control | Review area; no weighting implied |
Role in the Portfolio
What 30% looks like. In a $100 million private-markets portfolio, a 30% allocation to co-investments provides $30 million for individual transactions. Three equal investments would start at $10 million each.
A co-investment should serve a clear purpose. Carefully selected exposure can take the form of increasing a position in a company the office understands well. Sector access can include adding a market that aligns with the family's knowledge or interests.
Before proceeding, the investor should build a direct position alongside delegated manager exposure. Domain expertise means applying experience from an operating business or investment history.
The calculation shows why. A 10-business-day process with 2 committee meetings leaves roughly 5 business days between decisions. Legal, tax, commercial, and portfolio workstreams need named owners before the clock starts.
Co-investment timelines may be shorter than fund diligence timelines. Decide the process before opportunities arrive.
These questions help separate a strong case from a weak one. Who coordinates investment, legal, tax, and operational diligence? What evidence is required before the office can invest?
The practical details matter as well. How much company and sector concentration is acceptable? Which gaps, terms, or risks end the process?
Diligence Priorities
Carta's median later-stage tender in first-half 2025 was $27.6 million. Larger transactions can still carry concentrated security-level risk.
The investor should assess business quality, entry valuation, and expected dilution. The investor should understand preference, information, voting, transfer, and pro rata terms. Review the lead's own participation, fees, carry, and allocation rationale.
Model future capital needs and realistic exit timing. Combine the position with exposure held through existing funds and vehicles.
The more direct the exposure, the more operating work the family office may carry. Define what information should arrive and through whom. Establish how private marks will be reviewed and recorded. Tax documents can take the form of tracking vehicle and jurisdiction-specific reporting.
Capital calls and distributions can take the form of assign responsibility for funding and reconciliation. Internal reporting may involve maintaining a consistent view of cost, value, concentration, and risk.
Related reading. family office co-investment checklist and venture capital for family offices.
Stripe: selective participation beside large institutions
Stripe's 2023 Series I brought together venture firms, sovereign investors, wealth-management capital, and MSD Partners. It is a public example of a family-office-linked platform participating in a large private transaction.
The round valued Stripe at $50 billion.
The capital was not described as necessary for business operations.
Existing and new investors joined the same financing.
Co-investment can add precise company exposure, but participation beside respected institutions is not the investment case. The family office still needs independent valuation, terms, concentration, rights, liquidity, and follow-on analysis.
Primary sources: Stripe, Series I and employee liquidity (2023). Publicly reported transaction evidence; not presented as a Frontierspace result.
Frequently Asked Questions
Do co-investments replace venture fund commitments for family offices?
They usually work best as a complement. Funds can provide manager-led diversification, while co-investments allow selective access to individual deals and require more internal diligence.
What governance does a family office need for co-investments?
A practical process needs clear decision authority, rapid diligence, conflict review, portfolio limits, documentation standards, and ongoing reporting responsibility.
Related Reading
Family office venture capital guide, Family office co-investment checklist, and Co-investment versus fund investment.