Under The Hood: How VC Funds Operate (And How That Is Changing)

This is an article meant primarily for entrepreneurs and LPs (limited partners i.e., those investing in a VC fund), albeit we think it’s useful for VCs too. Managing Partners are typically the ones managing the fund’s structure, so other members of the firm are rarely exposed to these terms. So without further ado, here are the top 10 items under a venture capitalist’s hood. 1) Management Fee Historically VCs have operated on a 2% management fee i.e., 2% of the funds are used to run the fund every year. This is on commitments i.e., a $200M fund won’t have all…...