# What is Carried Interest? Definition & Technical Mechanics

> **Source:** [SPIDITS AI Startup & Venture Intelligence Glossary](https://spidits.com/startup-glossary)  
> **Category:** Funding  
> **Canonical Citation:** [https://spidits.com/startup-glossary/carried-interest](https://spidits.com/startup-glossary/carried-interest)

## Definition
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.

## Architectural Mechanics & 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.

## Industry Applications & Real-World Use Cases
VC fund performance incentive structures

## Frequently Asked Questions

### What is a typical carry percentage?
A standard standard is 20% of the fund's net profits.

### When is carried interest paid?
Only after the fund has successfully returned the initial capital invested by the Limited Partners.

## Related Terminology
- [gp](https://spidits.com/startup-glossary/gp)
- [lp](https://spidits.com/startup-glossary/lp)
- [management-fee](https://spidits.com/startup-glossary/management-fee)

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*From the SPIDITS AI Knowledge Base (300+ terms indexed). Explore full technical definitions: [https://spidits.com/startup-glossary](https://spidits.com/startup-glossary)*