# What is Management Fee? Definition & Technical Mechanics

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

## Definition
A Management Fee is a recurring fee paid to fund managers to cover operational expenses such as salaries, travel, and deal sourcing, typically calculated as a percentage of committed capital.

## Architectural Mechanics & Deep Dive
A Management Fee is a recurring fee paid to fund managers to cover operational expenses such as salaries, travel, and deal sourcing, typically calculated as 2% per year of committed capital.

## Industry Applications & Real-World Use Cases
VC operational cost budgeting

## Frequently Asked Questions

### What is the typical management fee rate?
Usually 2% per year of the fund's total committed capital.

### How long are management fees paid?
Typically during the active investment period of the fund (usually 10 years).

## Related Terminology
- [carried-interest](https://spidits.com/startup-glossary/carried-interest)
- [venture-capital](https://spidits.com/startup-glossary/venture-capital)
- [dry-powder](https://spidits.com/startup-glossary/dry-powder)

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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)*