What should an investor verify first?

A pre-set maximum single-deal size as a fixed percentage of investable net worth, set before evaluating opportunities.

Which documents matter most?

A personal written concentration policy, referenced consistently across every opportunity considered.

What is the main downside to test?

Sizing a position based on how compelling the specific pitch feels rather than a pre-set discipline.

How should the final decision be made?

Hold to the pre-set concentration cap regardless of how strong any individual opportunity appears.

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How Much Should You Put Into One Private Deal?

Aryan Singh1 min read

Understanding the Direct Deal

The right size for a single private deal is determined by loss capacity, liquidity needs, and total portfolio concentration — not by the minimum cheque size a manager sets, or by how confident the pitch made the investor feel.

Reading Rights, Price and Lead-Investor Quality

A useful starting discipline is capping any single private deal, co-investment or otherwise, at a small percentage of total investable net worth (commonly cited guidance ranges from 1-5% for a single early-stage position), given the real possibility of total capital loss on any individual private company.

Where Deal Underwriting Breaks

The common failure is sizing a position based on how attractive the specific opportunity feels rather than a pre-set concentration discipline. The deals that feel most compelling in the moment are exactly the ones investors are most tempted to oversize.

Making the Investment Decision

Before committing, set a maximum single-deal size as a fixed percentage of investable net worth before evaluating any specific opportunity, and hold to that cap regardless of how strong the individual pitch appears — the cap exists precisely for the moments it feels hardest to follow.

Total capital loss is a real, non-trivial possibility for any single private company — size every position as if that outcome could happen, because for some positions it will.

Key takeaways

Size private deals by loss capacity and portfolio concentration, not by minimum cheque or pitch confidence.
A common discipline caps any single early-stage position at 1-5% of total investable net worth.
Set the concentration cap before evaluating specific opportunities, not deal by deal.
Total capital loss is a real possibility for any single private company — size accordingly.

More in Co-Investments and Direct Private Deals

Continue with the other chapters in this module.

Co-Investments and Direct Private DealsWhat Is a Co-Investment in Private Markets?A co-investment is a direct stake in a specific portfolio company, offered alongside a fund's own investment in that same deal — the investor holds shares (or units) directly rather than through...Co-Investments and Direct Private DealsCo-Investment vs Direct InvestmentA co-investment rides alongside a fund's own diligence and deal-sourcing, entering on terms shaped by a professional lead investor.Co-Investments and Direct Private DealsCo-Investment vs AIF CommitmentAn AIF commitment provides diversified exposure across many portfolio companies chosen by the manager over time, with fees on the full committed amount.