3 ms·
Another reason could be this: My understanding is that most PE/VC funds typically have a "2 and 20" compensation structure. 20% of profits, and 2% annual fee
by sbaqai 16y ago
Another reason could be this:
My understanding is that most PE/VC funds typically have a "2 and 20" compensation structure. 20% of profits, and 2% annual fee on committed capital.
That incentivizes, regardless of performance outcome, committing as much capital as possible.
- mattmaroon 16y agoThat combined with taking board seats (which is why it's better for a VC to put $20m into one company than $10m into 2) is why VCs want to fund big rounds, but founders don't have any such incentive to take them.