When to expect option to co-invest?
I'm currently working as a development analyst and was curious as to when one can expect to be able to co-invest in deals? I imagine it varies widely from firm to firm, but do you see it at the associate level? Also, is it reasonable to expect that the majority of development firms will allow employees to co-invest or is it mainly just the larger funds?
Analyst 1 in RE - Other, hey, look at the bright side, at least you didn't get a ton of monkey shit thrown at you...here is my best guess on threads that might be helpful:
More suggestions...
Fingers crossed that one of those helps you.
Bump here, anybody have any insight
Bump. And how does the co-invest actually work?
You get the option to invest - either a certain % or up to a certain %. Alternatively, some companies (including mine) allow you to take a loan from the company to invest if you don't have the cash ready.
Do you invest as an LP position or as GP position?
Like do you get promote?
Or any other percs?
I got it at the VP level. You are correct though that it varies wildly.
At a national merchant build multi-family shop. Get option to co-invest at VP and up. You invest at the GP level and your money is spread across all the projects the company originates that year.
It varies by firm. I’m at a developer. They don’t allow anyone to co-invest.
My firm opened coinvest to all levels as long as you qualify as a knowledgeable employee.
My old firm opened it at VP and above.
Do you mean qualify as an accredited investor?
Knowledgeable Employee is a subcategory of accredited investor. You need to have knowledge/work on the strategy to qualify (and generally a salary above 200k).
As a general comment for the industry (not specific to development shops), this generally is offered starting at the VP level
Other comments are surprising, maybe my firm is unique or I’m misunderstanding terms. At my GP shop, the entire deal team can co-invest on deals (including myself, an analyst).
No promote on this co-invest (so essentially same treatment as LP dollars).
Does your firm offer the deal team financing for the co-investment?
Nope, no financing
Are you in debt? I feel like co-investing in debt is much more realistic for analyst level than equity. On both the fund side and the employee side.
Nope, development GP
That’s how my shop works too.
No financing, but I’m pretty sure I’m investing at the LP level as well.
I thought coinvest would involve the percs from the GP position?
Wanted more color on this as well..
Maybe this helps - our firm is the GP that is responsible for, say, 10% of the equity as coinvestment.
Our shop doesn’t fund all of that 10% out of our own pockets. Instead, we turn around and raise funds to coinvest in our GP position. We essentially offer LP splits.
Higher ups (associates and above) get to invest in the first bucket, where they get an appropriate portion of the GP promote. The coinvestment I’m referring to is the second bucket - as an analyst, I’m getting the “second layer” of coinvestment that is essentially just LP terms.
Hope that helps - I could be using the word “coinvest” incorrectly as opposed to what others are saying, where it seems to only refer to the first bucket that gets promote.
A lot of places will allow you to co-invest as an internal LP (i.e. no fees or promote paid, you basically get deal-level returns) at any level since there's no potential issues from their perspective aside from some minor admin work.
Being able to co-invest as a GP/share in promote is more shop dependent, usually Associate or VP.
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