Carried Interest

Also called Carry

Carried interest is the share of a fund's profits the general partners keep, classically 20 percent, after returning capital to LPs. It is how VCs get rich when their bets pay off.

Why it matters

Carry is the real reason VCs chase huge outcomes: a merely good return does not move their carry much. Knowing this explains why they push portfolio companies to swing big rather than settle for a safe exit.

For example

A fund returns 300 crore on a 100 crore fund; after paying back the 100 crore, the partners keep 20 percent of the 200 crore profit as carry.

Worth your time

Related terms

Management Fee General Partner Venture Capital

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