How do VC’s get paid? Where does a VC’s management fee go?
Posted by admin on 26 Mar 2010 8:00 am. Filed under Investing.
Michael
Does a venture capital firm’s 2-5% management fee cover the overhead expenses of the VC’s office & staff or what does it cover? How much of this is given as salary to General Partners, Venture Partners, Principals, etc.? What are the typical cuts each gets? Thanks!
Does a venture capital firm’s 2-5% management fee cover the overhead expenses of the VC’s office & staff or what does it cover? How much of this is given as salary to General Partners, Venture Partners, Principals, etc.? What are the typical cuts each gets? Thanks!
2 Comments to “How do VC’s get paid? Where does a VC’s management fee go?”
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On March 28th, 2010 at 6:56 pm
VCs get paid with shares at the IPO.
Fees are usually for advertising, offices and other expenses.
VCs don’t have salaries.
The cut changes on every deal.
On March 29th, 2010 at 5:03 pm
A typical VC general partner gets a 1-2% management fee plus a 20% cut of the profits (called the “carry”) generated from their investments. The limited partners invest the bulk of the money in the fund, but the general partner does the work in terms of finding and making good investments. The 1-2% management fees generally cover all the overhead expenses of general partner. The 20% carry goes to the partners and principals of the general partner. The split depends widely from firm to firm, but the most senior/founding partners typically take the majority of the profits.