What is Carried Interest for VC funds?
Nexa Consultancy | Startup & Finance Glossary
Carried interest is the share of profits (typically 20%) that the general partners of a venture capital fund receive as compensation, after returning the invested capital to the limited partners. Its tax treatment is a complex area of finance.
Startup Example: A VC fund raises ₹100 Crore and exits its investments for ₹300 Crore. After returning the ₹100 Crore to LPs, the GPs receive 20% of the ₹200 Crore profit (i.e., ₹40 Crore) as carried interest.
Understanding VC economics is key for our fundraising advisory.