What is Hurdle Rate?
Hurdle Rate
A Hurdle Rate is the minimum rate of return a venture capital fund must achieve for its investors before the fund managers (GPs) can begin collecting carried interest.
Detailed Deep Dive
A Hurdle Rate is the minimum rate of return a venture capital fund must achieve for its investors before the fund managers (GPs) can begin collecting carried interest.
Frequently Asked Questions
Q:What is a standard hurdle rate in venture capital?
Typically between 6% and 8% annualized.
Q:What happens if a fund does not meet the hurdle rate?
The GPs receive zero carried interest, and all profits are distributed solely to the LPs.
Quick Facts
- CategoryFunding
- Key ApplicationVC performance fee regulation
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