Recycling: The challenge and the opportunity for a Seed stage VC
OCTOBER 5, 2016
When Limited Partners (LPs) invest in a venture fund, they agree to pay an annual Management Fee on committed capital, usually on a declining scale over a 10 year period. In total, these fees amount to around 20% of an investors’ commitment, which implies that LPs only get to put 80% of their investment dollars to work because of management fees. We ended up Fund I being around 116% invested, meaning that we invested $58M against $50M of committed capital.