The comment makes a great point about management fees: "Well, most venture capitalists have started to optimize for management fees versus carried interest, or

The comment makes a great point about management fees: "Well, most venture capitalists have started to optimize for management fees versus carried interest, or sharing in the profits generated. It simply makes sense to raise larger funds every two or three years so that each partner can earn $2 or $3 million a year in guaranteed fees. With exits taking longer and failures rampant, praying to generate personal returns from the carry after paying back your principle is unrealistic." Which reminds me of a similar observation from the world of hedge funds: "Typically, hedge-fund managers charge their clients a management fee equal to two per cent of the amount they invest, plus twenty per cent of any profits that the fund generates. (This fee structure is known as 'two and twenty.')" "If a fund manager does well, he gets to keep a large portion of the profits he makes using his clients’ money; if he does poorly, he still receives the generous management fees, at least until his clients withdraw their money, which isn’t always easy to do." (http://www.newyorker.com/reporting/2007/07/02/070702fa_fact_cassidy http://www.newyorker.com/reporting/2007/07/02/070702fa_fact_...)