Venture Capital 101 : The Guide for Everything you Need
Share
Explore
Venture Capital 101 : The Guide for Everything you Need
What is Venture Capital?

icon picker
How Do VCs Make Money

How do VCs Make Money?

Management Fees

Typically around 2% annually of total fund
Pays the salaries and all of the fund expenses like legal fees
Management fees are paid out each year usually for about 7-10 years or when the fund ends

Carried Interest

Profit that the VC keeps after returning all the capital to the LPs
VCs typically get around 20% of profits from carry
VCs that are successful can have carry in the millions

Example.
Fund X has a $100M fund. Assuming they have 0 returns, they make $2M each year from management fees.
Assuming Fund X has some amazing companies and after the life of Fund X, they return $200M. They stand to make that $2M each year for the life of the fund + $20M from carry ($200m-$100m = $100m x 0.2 = $20m)


Management Fee Fund Calculator
0
Fund Size (M)
Management Fee %
Life of Fund? (years)
Annual Management Fee
Total Management Fee
1
20
2
7
$400,000.00
$2,800,000.00
2
1
2
5
$20,000.00
$100,000.00
3
57
1.5
10
$855,000.00
$8,550,000.00
4
​
​
​
$0.00
$0.00
There are no rows in this table
⁠

Gallery
Share
 
Want to print your doc?
This is not the way.
Try clicking the ⋯ next to your doc name or using a keyboard shortcut (
CtrlP
) instead.