All VC funds take the standard 2 and 20 - right?
Turns out, the management fees for many smaller funds are actually well above 2%.
This data reflects just the initial investment period for each fund (some funds switch fee structure after a set time frame, some after the initial investment period ends, etc).
We spend most of our time building insights for founders, but we also have a wealth of information relevant to fund managers. Thousands of VCs run their funds on Carta and a number of them have reached out lately wanting to know if their management fee structure falls in the normal range.
The standard line is VC economics starts with "2 and 20" - 2% management fees and 20% of any eventual returns.
𝗪𝗵𝗮𝘁 𝗱𝗼𝗲𝘀 𝘁𝗵𝗲 𝗱𝗮𝘁𝗮 𝘀𝗮𝘆?
2% is the most common fee - but other rates are used by a substantial number of funds.
Below $100M in AUM, 2% is the typical fee. That flips to 2.5% once a fund hits $100M.
As fund size grows, the distribution becomes more and more concentrated at 2% and 2.5%. Doesn't seem like 3% or more are real options at a certain scale.
Just starting explore all of the data we have on the VC fund side. If you're a VC with questions about your industry norms, throw them in the comments! Building our analysis set as we speak.
#cartadata #venturecapital #emergingmanager #startups #managementfees
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