What is Carried Interest?
Carried Interest
Carried Interest (or carry) is a share of the profits of a venture capital fund that is paid to the fund managers (GPs) as performance compensation.
Why It Matters for Startups
Directly dictates the cap table and dilution structure during fundraising; understanding Carried Interest helps founders model equity distributions when structuring rounds for vc fund performance incentive structures.
Detailed Deep Dive
Carried Interest (or carry) is a share of the profits of a venture capital fund that is paid to the fund managers (GPs) as performance compensation, typically structured as 20% of net fund profits.
Frequently Asked Questions
Q:What is a typical carry percentage?
A standard standard is 20% of the fund's net profits.
Q:When is carried interest paid?
Only after the fund has successfully returned the initial capital invested by the Limited Partners.
Quick Facts
- CategoryFunding
- Key ApplicationVC fund performance incentive structures
Coverage Trend12 Weeks
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