Carry (Carried Interest)

Carry, short for "carried interest," represents the percentage of profits that are paid to the lead of a fund or SPV.

Leads can choose the amount of carry they receive when they launch a fund or SPV. 20% is typical.

Let's look at an example:

  • Lead is charging 20% carry
  • LP invests $5,000
  • The company has a successful exit, and the distribution is worth $100,000

The lead will receive 20% of the amount the investor earned ($100,000-$5,000), which is 20% of $95,000 or $19,000. The investor will receive their initial investment ($5,000) plus the remainder of the earnings ($76,000), which nets out to $81,000.

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