Coming in as the first junior at the Senior Associate level for a first time fund. Fund is targering $300mm+ for the first fund and I feel confident they will be able to hit that based on the founders track records. What should I be expecting / pushing for with respect to cash comp and carry. This is not in a Tier 1 city for context so would expect a discount to NYC/SF/BOS comp
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For a first-time fund targeting $300mm+, here’s what you should consider based on the most helpful WSO content:
Cash Compensation
Carry
Negotiation Tips
Final Thoughts
While cash comp might be slightly discounted due to the location and first-time fund status, you should push for a meaningful carry allocation to offset this. A package combining $200k-$250k cash comp and ~0.3%-0.5% carry would be reasonable and competitive in this scenario.
Sources: Carried interest for Associates / Senior Associates?, Is this associate compensation competitive?, NYC MF Credit Associate Comp (recent data points, lateral move), Carry in REPE, Expected carry compensation at senior associate/VP level?
I would think of tier 1 city total comp as ~$300k mainly cash. Tier 2/3 city, I’d say $250k cash no carry (I’m in tier 3 city currently). If it’s first time fund in tier 2/3, I would think it will be lighter on the cash maybe $200k total but you should be able to get enough carry to bring you back to $300k total to adjust for risk. I had considered joining startup funds and everyone seemed pretty onboard with lighter cash comp but participating in upside. Justifications for carry and higher total comp is 1) lower cash comp and 2) higher risk level joining startup firm so need disproportionate upside. $300mm fund should generate $6mm mgmt fees so should have enough to go around
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This is helpful, thank you. The numbers I had in my head were ~270 cash, with ~200K DAW, to get to around 310 total comp (200k annualized over 5 years). My cash expectations sound like they might be a little high
I would not be afraid to advocate for it. If it’s an open discussion or up to you to propose a number, go for it. Do a little poking around for the compensation reports from some head hunters—that’ll give you some supporting data points
What cash/carry #’s did you end up agreeing to? I’m looking to join a first time fund now (albeit it’s a T1 city), so also curious what specific geography you’re sitting in to benchmark
do associates usually earn carry only at 1st-time funds that are still raising money/havent' met their funding target yet? i'm at a 1st-time fund and wasn't offered carry because the firm had already/just finished raising the fund by the time i joined.
From my personal experience, have only seen carry come into play at the SA level and above, even at very young firms. That being said, no reason to believe that some first time funds wouldn't give marginal carry at the Associate level.
Worked at a first time fund around this size in NYC/SF. For Senior Associate was at $200k cash + $650k DAW
that cash comp seems very low, especially given 1st tier city and sr asso. DAW is always a probability game and seems like these days it's hard to actually get the quoted amount. curious why you ended up accepting that offer cuz it doesn't seem that attractive
I agree with all the above. In my mind I had it as ~$250k cash with some decent carry.
If anything, I think you'd be able to index on more compensation by asking for more carry early on. If you're the first junior hire, they should have a lot of carry to play with and the narrative is that in joining early you're buying into the fund alongside them, so you're happy to take the risk of taking some of your compensation as carry to defer it, free up more of the mgmt fees to grow the firm, and then if everyone does their job well, you'll all make money.
At the end of the day, the goal of joining a $300M first time fund is to have major upside if the firm does well. If you're indexing on cash comp, you should probably be looking for another job.
Hell, if I were you I'd probably be willing to go down as low as $200-225k, assuming that allowed you to still live a good life and put some money away and I'd roll the dice on the fund being a strong performer.
What would decent carry here be in your view
Any thoughts on comp / carry expectations for VP (4-5 years PE experience) at a first-time fund ($250-500m)?
250m vs 500m is a material difference in fund size
At the $250m I’d say probably in the low 300s and for $500m you’re probably high 300s / low 400s with carry being all over the place
Fwiw I was offered in a Tier 1 city ~$400M first time fund and was guided high $300s with ~$2M DAW for a VP1
Appreciate the input!
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