A side letter is a separate agreement between a company and one specific investor, granting that investor rights or terms not given to other investors in the same round, without changing the main financing documents everyone else signed.
Common examples include extra information rights (regular financial updates beyond what other investors get), a right to observe board meetings without a formal board seat, or an MFN clause. Side letters let a company accommodate one investor's specific ask without renegotiating the entire round's standard terms.
Because side letters exist outside the main documents, they're easy to lose track of over time, especially across several rounds with several different investors. Keeping a clear running list of every side letter and what it actually grants is part of the same discipline that keeps a cap table and data room accurate.
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