Investor Connect Podcast

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

So how do Venture Capitalists make money?

VCs charge the limited partners a management fee on the funds raised. This is traditionally 2% which is paid out every year for the life of the fund.  

Some funds stop the management fee around year six or seven as proceeds from the investments start coming in.

MicroVCs often charge 2.5 or 3% of the funds raised since the amount of funds is lower than standard. 

The second source is called “carry” and is a percentage of any proceeds going back to the investor from the investments.

This is traditionally 20%.   

Some funds start taking carry at the beginning of the investment returns, while other funds start this after the investor receives their initial investment.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.
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Direct download: EG_Mar_2020_Startup_Funding_Espresso--_How_VCs_Make_Money.mp3
Category: -- posted at: 11:00am CDT