Private Equity, Venture Capital Capital, Carried Interest, Carry, Fund of Funds, Management Fee, Rule of Thumb
Fund of Funds typically receive a 1% management fee and 5% carry (or carried interest). Since funds of funds are much more scalable than a direct investment fund, they can charge a lower management fee and carry and make up the difference by quickly deploying the committed capital and raising another fund. This allows them to quickly amass a large amount of capital under management and thus earn significant management fees.
Startup, Venture Capital Capital, Cash Flow Positive, Financing, Rule of Thumb
On average start-up new ventures will require $68 million in financing to reach cash flow positive. This capital is typically raised over 4 rounds. Once the new venture reaches cash flow positive, in theory, it should be self-sufficient thus not requiring any further investment.