Equity Co-Investment

Two venture capitalists want to invest in the same company. Each wants to put in $3 million, but one of the firms wants to be the "lead investor" so that they can set the details of the various terms in the contract.

How is the preferred stock defined? Is it "participating"? See: Participating Preferred. Is there a "clawback provision"? Lots of other details that the lead hammers out with lawyers. One VC wins; the other becomes the co-investor...or rather, follows the lead of the lead investor, making this equity co-investment.