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It’s true that FoFs provide LPs a way to purchase VC funds in a basket, but by design these are comparatively narrow actively-managed investment funds rather than broad-based passive vehicles. fund or marginally profitable fund doesn’t generate any carry for the GPs that are investing it.
However, I will then argue that while these methods are necessary to managing new ventures inside a company, they are insufficient. Worse, Robert Adams and his two partners got 20% of the carriedinterest in the fund, resulting in payouts of $30 million to the partnership.
What’s a “fair” split of fee income and carriedinterest when a partner joins several years/funds after others? How do you deal with a severely uneven distribution of investment success between individuals or groups of partners? To a lesser extent the desire for greater industry prestige is a factor.
The business model (OEM through broadband and home security companies for mass distribution) if not specific product functionality has remained largely the same. And this is a company that has managed to get an A+ list of investors and is executing very well. offering to invest $75K if we could find another $250K by September 30, 2005.
Ampex’s first customer was Bing Crosby who wanted to record his radio programs for rebroadcast (and had exclusive distribution rights.) Meanwhile on the West Coast – “The Group” 1950’s When Ampex was raising its money, in 1952, an employee of Fireman’s Fund in San Francisco, Reid Dennis , managed to put $20,000 in the deal.
Sean Seton-Rogers, Partner, Profounders Capital, breaks the conversation into three areas: Control: voting/veto for new deals, share of management company. Compensation : base salary, share of profits of management company, carry. Senior partners take home a lower 15 percent of the carriedinterest….Summarizing
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