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Explaining carried interest

The Equity Kicker

Carried interest’ is the name given to the profit share schemes that investors in venture capital funds, typically called ‘LPs’, use to incentivise the partners at at the funds in which they invest. Much like options in a startup carried interest schemes vest over time, typically five or seven years.

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Where Does VC Money Actually Come From? [Flowchart]

View from Seed

The income these investments generate then help fund the operations of those organizations or capital investment (e.g. Endowments are the funds established by universities, hospitals, museums, and other non-profits to invest for the long term. new buildings, etc).

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What’s the Difference? Venture Capitalist vs. Angel Investor

The Startup Magazine

An article in Forbes explains that a venture capital firm makes its money through management fees (a percentage of the amount of capital that they have under management) and carried interest (a percentage of the profits of the business). Investor Involvement. Angel Investors. Investor Involvement.

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Where Do Venture Capital Dollars Actually Come From? This Visual Explains

Agile VC

The income these investments generate then help fund the operations of those organizations or capital investment (e.g. Endowments are the funds established by universities, hospitals, museums, and other non-profits to invest for the long term. new buildings, etc).

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Why I Don’t Celebrate Income Inequality

Both Sides of the Table

VCs also get capital gains tax rates on “carried interest,” which is what irritates the masses. Carried interest is the upside that VCs get after returning the money they raised – it is the VC “profit” if you will. Maybe that’s as it should be.

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Top 29 Startup Posts May 2010

SoCal CTO

While Google fights on the edges, Amazon is attacking their core - Chris Dixon , May 22, 2010 Google is fighting battles on almost every front: social networking, mobile operating systems, web browsers, office apps, and so on. We'll be your hosts for a three-part series about the use of MongoDB here at Etsy. The Curation Team. Stay Tuned.

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How VCs Make Money….Hopefully

ithacaVC

Fourth, GP1 is entitled to a carried interest in fund profits. Therefore, the returns from the sale/IPO of the fund’s portfolio companies must clear capital commitments before GP1 gets any carried interest. There is actually a great deal of complexity when operating a live fund.