Venture fund economics calculator
Enter your fund size, fees, carry and GP commit. See your fee income each year, what the partners have to put in, and what the fund must return before carry pays out.
- Management fees over the fund's life
- Fee income per year
- GP commit the partners must fund
- Fund must return before carry pays out
Fee income by year
Show as a table
Carry at different outcomes
Gross multiple on the capital you actually invest, after fees. GP commit is treated as carry-free.
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How management fees work
Most venture funds charge an annual management fee of around 2% of committed capital during the investment period, usually the first four to five years. It pays for the team, office, legal, audit and fund administration.
After the investment period many funds step the fee down, either to a lower rate or to a percentage of the capital still invested. Fees come out of LP commitments, so every dollar of fees is a dollar that isn't invested. On a 10-year fund at 2%, fees can take up close to a fifth of the fund.
How much should GPs commit?
LPs want the partners to have real money in the fund. A GP commit of 1% to 2% of fund size is a common reference point, but LPs look at it relative to the partners' own wealth, not just the percentage.
The commitment is called over time alongside LP capital, so plan for the cash across the investment period, not on day one. Some LPs will ask where it comes from, and whether any of it is funded by waiving management fees.
With a fee waiver, the partners give up part of the management fee and it goes into the fund as their commitment. The partners put in no cash, and LPs effectively pay for it through their fees. It helps when the team can't write a large check, but some LPs see it as a weaker signal because no new money is at risk.
When does carry start paying out?
In a whole-fund (European) waterfall, LPs get back everything they paid in, including the fees, before the GPs see any carry. That's why the fund has to return more than 1x on the capital it actually invests just to reach the carry line.
With a hurdle, LPs also receive a preferred return, often 8% a year in funds that use one, before carry. Many US venture funds have no hurdle. Where there is one, a catch-up usually lets the GPs recover their full share of profits once the hurdle is cleared.
What this calculator assumes
- All committed capital is called over the fund's life.
- Fees after the investment period are charged on committed capital. Charging on invested capital would lower them.
- No recycling of fees or proceeds, and no fund expenses beyond the management fee.
- A whole-fund waterfall. With a hurdle, the preferred return compounds on LP capital for the years you enter, with a full GP catch-up.
- The GP commit pays no carry and shares returns like LP capital.
- A fee waiver is taken evenly across the investment period and treated like cash for returns. In practice, waiver interests are often paid only out of fund profits.
This is a planning tool, not legal, tax or investment advice. Your LPA governs the real numbers.
Frequently asked questions
What is a typical management fee for a venture capital fund?
Around 2% a year of committed capital during the investment period is the most common reference point, often stepping down afterwards. Some smaller funds charge more because their fixed costs are high relative to fund size, and some larger funds charge less.
How much of a venture fund goes to management fees?
On a 10-year fund charging 2% for the first five years and 1.5% after, fees add up to 17.5% of commitments, leaving about 82.5% to invest. Step-downs to invested capital, fee offsets and recycling of proceeds change the total.
What is a GP commitment, and how much is typical?
It's the partners' own money in the fund. A GP commit of 1% to 2% of fund size is a common reference point, but LPs judge it against the partners' personal wealth, not just the percentage.
What is a management fee waiver?
The partners give up part of their management fee and it goes into the fund as their commitment instead of cash. It helps teams that can't write a large check, but some LPs see it as a weaker signal because no new money is at risk.
When does carried interest start paying out?
In a whole-fund (European) waterfall, LPs get back everything they paid in, including fees, plus any preferred return before the GPs receive carry. Deal-by-deal (American) waterfalls can pay carry earlier, usually with a clawback.
What is a hurdle rate in a venture fund?
A preferred return LPs receive before carry is paid, often 8% a year in funds that use one. Many US venture funds have no hurdle. Where there is one, a catch-up usually lets the GPs recover their full share of profits once it's cleared.
From VC10X, hosted by Prashant Choubey. Updated .
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