A VC firm is considering two compensation structures The fund is $100m Management fees will be 2 5 per year on committed capital for all 10 years Option A the fund will charge 25 carry with committed capital as the basis Option B the fund would have 20 carry on all investment capital Q1 Suppose tha...

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A VC firm is considering two compensation structures. The fund is $100m. Management fees will be 2.5%

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A VC firm is considering two compensation structures. The fund is $100m. Management fees will be 2.5% per year on committed capital for all 10 years.

Option A: the fund will charge 25% carry with committed capital as the basis.
Option B: the fund would have 20% carry on all investment capital.

Q1. Suppose that total exit proceeds from all investments are $150m at the end of the fund's life. How much carried interest would be earned under A and B?

Related Book For answer-question

Venture capital and the finance of innovation

ISBN: 978-0470454701

2nd Edition

Authors: Andrew Metrick

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Posted Date: May 11, 2024 03:14 AM

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A VC firm is considering two compensation structures. The fund is $100m. Management fees will be 2.5%

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Venture capital and the finance of innovation

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