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The article somehow misses the mark on how VC firms actually make money apart from carry, its management fees. Thus, a16z raising a 20b fund on 3% management fe
by enahs-sf 1y ago
The article somehow misses the mark on how VC firms actually make money apart from carry, its management fees. Thus, a16z raising a 20b fund on 3% management fee and 30% carry effectively guarantees them 600M even if the fund goes to zero and they have many such funds.
Sure, they would prefer to make money through carry, but the management fee is a nice downside protection.
- alephnerd 1y agoFunds like A16Z can demand a high management fee because they have shown that they can deliver reasonable exits. Most funds have management fees in the 1-2% range and a carry at around 20%. VC is a power curve, where a couple of large funds have an outsized impact. And if a fund or VC (from associate to partner) cannot deliver, your career in the space is basically over.