Rules Of Thumbs

Fund of Funds Fee Structure

Nov 08

adminPrivate Equity, Venture Capital Capital, Carried Interest, Carry, Fund of Funds, Management Fee, Rule of Thumb No Comments

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.

Typical Fees for Venture Capital General Partners

Nov 06

adminPrivate Equity, Venture Capital Carried Interest, claw-back, Fees, Management Fee, Rule of Thumb 2 Comments

The General Partnership (GP) of a venture capital fund typically receive to types of fees for their investment services:

• A 20% carried interest.  This means they receive 20% of all of the capital gains on the funds they invest.  Typically they must repay all of the contributed capital or they may be forced to pay this carried interest back to the Limited Partners (LP), this is known as a “claw-back”
• A 2.5% management fee.  This fee is charged on all COMMITTED capital, regardless of whether or not it has been invested yet.