Carried Interest
Carried Interest, often called "Carry," is a key part of how venture capital professionals get paid. It's like a bonus that venture capitalists receive when their investments make money. Think of it as a share of the profits from successful investments, usually around 20%. For example, if a venture capital fund makes $100 million in profit, the team might get $20 million as carried interest to share among the partners and key team members. This is different from their regular salary and is a major reason why people want to work in venture capital. It's similar to how real estate agents get a commission when they sell a house, but in this case, it's for investing in and helping grow companies.
Examples in Resumes
Managed investment portfolio resulting in 25% Carried Interest returns for fund partners
Structured deals with Carry provisions that aligned investor and founder interests
Developed models to track and forecast Carried Interest distributions across multiple funds
Typical job title: "Venture Capital Professionals"
Also try searching for:
Where to Find Venture Capital Professionals
Professional Networks
Job Boards
Industry Events
Example Interview Questions
Senior Level Questions
Q: How would you structure carried interest in a new fund to attract and retain top talent?
Expected Answer: Should discuss standard industry practices (like 20% carry), vesting schedules, clawback provisions, and how to balance junior and senior team member interests.
Q: What factors affect carried interest calculations and distributions?
Expected Answer: Should explain hurdle rates, catchup provisions, distribution waterfalls, and how different fund structures can impact carry calculations.
Mid Level Questions
Q: How does carried interest differ from management fees?
Expected Answer: Should explain that management fees are regular payments for running the fund (like salary), while carried interest is performance-based and only paid when investments are profitable.
Q: Explain how carry is typically distributed among team members.
Expected Answer: Should discuss typical allocation between senior and junior team members, vesting periods, and how carry pools work.
Junior Level Questions
Q: What is carried interest and why is it important in venture capital?
Expected Answer: Should explain that carried interest is a share of investment profits that incentivizes VC professionals to make successful investments.
Q: How is carried interest typically calculated?
Expected Answer: Should explain the basic concept of the standard 20% carry after returning initial investment to limited partners.
Experience Level Indicators
Junior (0-2 years)
- Understanding of basic carry calculations
- Knowledge of fund structures
- Financial modeling basics
- Deal documentation
Mid (2-5 years)
- Carry modeling and forecasting
- Deal structuring
- Portfolio management
- Waterfall calculations
Senior (5+ years)
- Fund structuring and carry negotiations
- Complex waterfall structures
- Team compensation planning
- Limited Partner relations
Red Flags to Watch For
- No understanding of basic fund economics
- Inability to explain difference between management fee and carried interest
- Lack of experience with financial modeling
- Poor grasp of investment terms and structures
Related Terms
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