A sidecar fund invests in the same portfolio companies as a primary fund but as a separate legal entity with its own LPs and economics.

How it works

The main fund leads with its standard fee and carry. The sidecar — sometimes called a co-invest fund or LP sidecar — follows into the same round on substantially the same terms, often with reduced or zero carry for LPs as an allocation perk.

GPs use sidecars when fund concentration limits cap check size but strong LPs want more exposure. Employee sidecars occasionally let firm staff invest personally alongside institutional capital.

Cap tables list both entities separately; voting and information rights should be coordinated to avoid fragmented shareholder blocks.

Why it matters

• Founders: Multiple funds from one firm on the cap table is normal — confirm single point of contact for board and consent matters.
• Investors: LPs distinguish fund return from sidecar return; fee economics differ and affect net performance.

Common mistake

Assuming sidecar capital comes with the same value-add intensity as the lead fund check — sidecars are often passive co-follows.

Related ideas

• SPV
• Co-investment programs
• Side letter