Co-Investment

Definition

Co-investment, in the context of BD compensation, refers to an equity stake granted to a business development professional in a specific portfolio company they helped source. Unlike carried interest (which is tied to overall fund performance), co-investment equity is tied to a single deal and pays out upon exit of that particular company.

Context

In Ep. 3, Matt Rooney describes co-investment equity as an additional incentive mechanism for BD professionals beyond base, bonus, and carry. Structures range from a flat dollar amount of equity per deal to multiplier-based formulas — for example, "$1,000 of equity per million dollars deployed." Because the payout is tied to a single investment's exit rather than fund-level returns, the timeline and risk profile differ from carry.

Related Terms

• Carried Interest — fund-level long-term incentive (vs. deal-level co-investment)
• BD Team Structure and Compensation
• Platform Company — the type of deal most commonly associated with co-investment grants