Gust

MAY 7, 2014

The general partners of a venture capital fund make money… …by raising the bulk of the capital that the fund’s investable capital from “Limited Partners”, usually institutions such as university endowments, insurance companies and pension funds. This is the money that is invested into the startups.

Venture Capital 154

Venture Capital IPO Limited Partner Carried Interest 154

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.

Angel Investor 122

Angel Investor Venture Capital Accredited Investor Equity 122

ithacaVC

MAY 10, 2011

First, VCs get capital commitments from limited partners (i.e., Capital is called when needed for investment, fund expenses or management fee. Second, the General Partner of VC1 is the entity that runs the fund (let’s call it GP1). So, in this respect, you can think of GP1 as a limited partner.

Carried Interest 51

Carried Interest Ratchet Limited Partner Due Diligence 51

ithacaVC

JANUARY 10, 2012

Managing Partner/General Partner (I have seen some with Managing Directors too like an investment bank): top dogs that run the shop and own most of the carried interest. Other staff like a controller or CFO; marketing coordinator; investor relations manager; and general counsel. It carries cache.

Partner 49

Partner Carried Interest Caching Harvest 49

David Teten

MARCH 2, 2013

In response, Tom writes, “The Kauffman data set is exceptionally small in comparison to the others and inherently biased (not in a nefarious way, but in the statistical sense that they had an active management policy that selected their investments and those are the funds for which they have return data).

LP 114

LP Securities and Exchange Commission Silicon Valley Venture Capital 114

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). In the early morning, a show of hands revealed about a 20% LP audience and 80% fund manager group.

LP 60

LP Private Equity Due Diligence Venture Capital 60

View from Seed

OCTOBER 29, 2014

Most of the dollars a VC firm invests come from outside limited partner investors (LPs). The actual partners of a VC firm (GPs) will typically invest a minimum of 1% of the total size of their fund,* though frequently this percentage is substantially higher (especially in many of the best funds). The first is a staff constraint.

LP 335

LP Private Equity Institutional Investors Venture Capital 335