Co-investor

Definition

An investor who joins a round on terms somebody else has already set.

Why It Matters

A round needs somebody to price it, so a raise made only of these does not close, and the order of a searcher's calls follows from that one fact. For the investor it means accepting a valuation and a governance package they did not negotiate, which is why most of the work here is diligence on the firm that priced it instead of on the company. For the searcher it changes what each call is for: the first is a negotiation and the rest are a distribution. Ask a firm which of the two it does before sending anything, because the answer decides whether you are asking for terms or asking for a check.

In numbers: A $450,000 search raise sold in fifteen units is one investor pricing the unit and fourteen following it, and the fourteen do not exist until the first one signs.