How Family Offices Use Co-Investments

Key Takeaways

Give each co-investment a portfolio role: It may increase conviction, add a relevant sector, complement a fund, or apply existing family expertise.
Prepare the decision process in advance: Short timelines require clear review responsibilities, minimum information, position limits, and pass criteria.
Look through existing exposure: A named company may already be held through one or more venture funds or family vehicles.
Plan for post-close work: Reporting, valuation, tax, capital calls, distributions, and follow-ons require an operating process.

A Public Example

Goldman Sachs' 2025 family-office report shows family offices maintaining meaningful private-market exposure 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 practical lesson: The benefit depends on internal underwriting capacity, conflict review, concentration limits, and the ability to act within the deal timeline.
Useful number: Co-investments are often evaluated against the traditional 2 and 20 fund baseline, but fee savings only matter if company-level risk is acceptable.

Why Family Offices Use Them

Portfolio backdrop: UBS reported 54% of surveyed US family-office portfolios in alternatives, including 27% in private equity and 18% in real estate.

Company visibility: Review a named business, price, and structure before investing.
Portfolio control: Decide where incremental private-market exposure is added.
Manager relationships: Work more closely with sponsors around specific opportunities.
Network development: Build relationships with founders, co-investors, and strategic partners.

Visual analysis

Family Office Co-Investment Use Cases

Co-investments can add targeted exposure, deepen manager relationships, or apply family expertise, but each use needs a position limit.

Priority map Framework

Domain fit

Sponsor relationship

Concentration control

View chart data and assumptions

Data and assumptions for Family Office Co-Investment Use Cases
Area	Treatment
Domain fit	Review area; no weighting implied
Sponsor relationship	Review area; no weighting implied
Concentration control	Review area; no weighting implied

Equal-area priority map. Card size does not represent portfolio allocation or expected return.

Role in the Portfolio

Sleeve example: A $100 million private-markets portfolio with a 20% co-investment sleeve allocates $20 million to transactions. Five equal co-investments would begin at $4 million each.

A co-investment should serve a defined purpose.

High-conviction exposure: Increase a position in a company the office understands well.
Sector access: Add a market that aligns with the family's knowledge or interests.
Fund complement: Build a direct position alongside delegated manager exposure.
Domain expertise: Apply experience from an operating business or investment history.

Governance and Decision Speed

Committee capacity: 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.

Review ownership: Who coordinates investment, legal, tax, and operational diligence?
Minimum information: What evidence is required before the office can invest?
Position limits: How much company and sector concentration is acceptable?
Pass criteria: Which gaps, terms, or risks end the process?

Diligence Priorities

Secondary reference: Carta's median later-stage tender in first-half 2025 was $27.6 million, 5.5x the $5 million median at Series B or earlier. Larger transactions can still carry concentrated security-level risk.

Company and price: Assess business quality, entry valuation, and expected dilution.
Share class and rights: Understand preference, information, voting, transfer, and pro rata terms.
Sponsor incentives: Review the lead's own participation, fees, carry, and allocation rationale.
Follow-on and liquidity: Model future capital needs and realistic exit timing.
Look-through concentration: Combine the position with exposure held through existing funds and vehicles.

Reporting and Administration

The more direct the exposure, the more operating work the family office may carry.

Company updates: Define what information should arrive and through whom.
Valuation: Establish how private marks will be reviewed and recorded.
Tax documents: Track vehicle and jurisdiction-specific reporting.
Capital calls and distributions: Assign responsibility for funding and reconciliation.
Internal reporting: Maintain a consistent view of cost, value, concentration, and risk.

Public deal case study

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.

$6.5B+ Financing

The round valued Stripe at $50 billion.

Employee liquidity Purpose

The capital was not described as necessary for business operations.

Broad syndicate Access

Existing and new investors joined the same financing.

What it shows: 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). Public transaction evidence only; this is not represented as a Frontierspace investment or result.

Frequently Asked Questions

Do co-investments replace venture fund commitments for family offices?

Short answer: They usually work best as a complement. Funds can provide manager-led diversification, while co-investments allow selective transaction-level exposure and require more internal diligence.

What governance does a family office need for co-investments?

Short answer: A practical process needs clear decision authority, rapid diligence, conflict review, portfolio limits, documentation standards, and ongoing reporting responsibility.