How Venture Firms Make Money

The basic structure is what we call 2 and 20. So a 2% per year management fee and a 20% carried interest or carry as people typically talk about it. The economics say that your management fees are going to increase in proportion with the size of the fund. A venture capitalist might be running a $100 million fund and spending just as much time on that as a hedge fund guy running a $10 billion fund.