The Equity Kicker
MARCH 25, 2014
‘Carried interest’ is the name given to the profit share schemes that investors in venture capital funds, typically called ‘LPs’, use to incentivise the partners at at the funds in which they invest. Hurdle rates stipulate that the Manager delivers a minimum return before any carry gets paid out.
Agile VC
OCTOBER 23, 2012
And even if they wanted the index return, there is essentially no way to buy (or sell) a broad-based basket of VC funds in the way you can trade the S&P 500 or Russell 2000 or other public equity index. fund or marginally profitable fund doesn’t generate any carry for the GPs that are investing it.
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David Teten
SEPTEMBER 2, 2017
It’s hard enough to get a job at a venture capital or private equity firm; it’s even more complex to join as a Partner. Also see Preqin’s Key Due Diligence Considerations for Private Equity Investors. . VC and private equity are very illiquid on both the investing and the personnel side. So assessing fit is critical.
The Startup Magazine
MARCH 22, 2019
An article in Forbes explains that a venture capital firm makes its money through management fees (a percentage of the amount of capital that they have under management) and carried interest (a percentage of the profits of the business). Investor Involvement. Reprinted with permission, Rivier University.
Agile VC
JULY 11, 2012
in equity & loans which was ultimately worth >170x ($355M) when DEC went public about a decade later. What’s a “fair” split of fee income and carried interest when a partner joins several years/funds after others? Big success was Digital Equipment Corporation (DEC), in which ARD invested about $2.1M
David Teten
MARCH 2, 2013
The Economics of Private Equity Funds demonstrates that the VC industry survives mostly on fee-based income (of which larger funds have a proportionally larger amount). It’s not impossible to manage a large fund for high returns, but it’s empirically very difficult.
BeyondVC
JUNE 29, 2005
I am not sure how many entrepreneurs understand the structure of venture capital funds but the bottom line is that while VCs manage funds, we ultimately report to our investors or Limited Partners (LPs). It is not our money, and we have a fiduciary responsibility to manage it properly and generate the returns our LPs expect of us.
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