VP comp & carry
Would love to compare VP comp and carry across fund size & locations.
I will start for my fund:
Title: VP1
Fund size: UMM ($10Bn)
City: T1
Cash comp: $500k
Carry allocation: $1.5m over 5 years (~$300k add. yearly theoretical comp)
What does yearly carry allocation mean ? You receive that in distributions or what
Would be helpful to know your YOE ahead of VP1, since promotion timelines can be vastly different.
e.g. KPS: 2 years IB -> 3 years Asso, 3 years Sr. Asso -> VP1
OP here.
2 years IB -> 2 years ASC & 2 years Sr. ASC -> VP 1
That carry feels low. I thought VP carry should be $3m+ for your fund size. Do your carry points escalate quickly with seniority?
Title: VP1
City: T1
Fund Size: US$15bn+
Cash comp: $600k
Carry allocation: $5m DAW
OP is being paid below market carry
At the VP level, is it market for DAW to increase each year, or once you’re locked in, you’re locked in until the earlier of your promotion or the next fundraiser?
Our fund it’s locked typically until next fund raise. With that said if you get a promotion and the next fundraise is a couple years away you’d probably get a top up on your carry grant
Ignore the title
VP1 at LMM (investing out of 2nd sub 1b fund, 3rd maybe a bit bigger)
T2 city
500k cash
$2-3MM DAW
On avg work 50ish hrs/week
Pretty happy ngl
$500k for LMM is insanely good
Hours?
He wrote 50h a week
Crazy good job it sounds like
VP2 at direct PE @ SWF/evergreen fund (not coinvest; PE and minority growth), SF
750 cash, ~1.5 DAW equivalent
How are hours
Temasek or GIC?
That’s wild cash
basically no carry
Damn brother - You hiring?
How does DAW work at SWFs?
Title: VP2
Fund size: $1B AUM
Tier 3 city
Cash: $400-450k
Carry: $3M DAW across two funds
$425k cash for a presumably ~$500mm fund in Tier 3 feels above market. Do you think it’s about right from friends you have?
I don’t really talk money with friends so all I can gather is from here.
Title: VP2
Fund size: $1B
Tier 2/3 City
Cash: $400-$450k
Carry: $1.5M DAW
Dumb question but would appreciate an explanation. When people say a VP2 has $2M in DAW, is that an annual comp figure from carry (2M per year, 4M total) or the total value accumulated (2M total for the past 2 years)?
Total value when fully vested, usually assuming a 2x MOIC. The “annualized” figure would be headline DAW / vesting period.
Reading all the responses in this thread, I want to provide another way of thinking of Dollars at Work (DAW).
While everyone is explaining it indirectly - and correctly - as “the amount you’ll be paid out, once fully vested, if the fund attains a 2x return” - there is a much simpler explicit way to think about it.
Dollars at Work essentially says, “we will compensate you as if were an LP in the fund”. The partnership is giving you X dollars to put “to work”, and once you pay them back for the original “investment”, you will keep the net gain.
Then:
2x MOIC, $1M DAW “invested” into the fund = $2m gross return, and $1m gain paid to you as comp
5x MOIC = $5m gross return, $4m net gain paid as comp
You’re welcome.
Would also be interesting to hear if people have accrued carry at multiple funds yet since this is the true moneymaker. Realizations / portco quality and waterfalls also play into this.
Datapoint from one friend at mid-market PE (4bn fund):
Another verified data point (assoc 1, EU) - 1bn fund - 250k DAW - American waterfall - 250k usd comp - TBD if 2.0x hurdle will be met
VP3
T2 City
10 YOE
$1B Current Fund
$400k cash comp
$4m DAW
Work 50-60 hours per week. Peak around 80 per week.
can someone explain DAW to me like im a little bit retarded
Your boss doesn't know exactly how much pie to give you today because nobody knows how big the entire pie will be yet (until investments are realized). They still want you salivating at the promise of getting a delicious and large slice of pie (in hopes you will work hard and not leave) by quoting "Dollars at Work" (DAW) as a way to quantify the unknown size of the actual pie. It is typically a rough proxy for how much carry dollars (pie) you'll get assuming the fund returns a 2x MOIC.
Below is some simple math assuming 1% carry allocation on a 1B fund. There are some nuances and technicalities but this is a good way to wrap your head around it.
1B fund * 2x MOIC = 2B
2B-1B = 1B profit
1B profit * 20% firm carry = 200M of pie for everyone at the firm to enjoy
200M pie * your 1% allocation = 2M DAW
why not just speak in % allocation then?
Considering the median net TVPI for PE since 1996 has only been above 1.7x like half the time (almost all during ZIRP) the DAW figures thrown out are going to be useless. Carry is probably dead for more than half of funds raised from 2018-2021 IMO.
MM where founders take the lion share of the carry.
Fund size: $4Bn
Cash comp: $400k
DAW: $1.2M (15bps)
How much bps is typical for VP1? Not much point comparing my DAW vs. MF..
That feels pretty light. My fund is half the size and VP 1s get similar cash but $3M+ DAW
What is the vesting schedule like for your carry?
4 years straight line
Vest is very favorable. Many places are 7+ years backweighted. DAW feels a little livht but not egregiously so — most VP1 offers out of MBA I saw clustered around $1-1.5mm DAW for LMM and MM funds. MF was obv higher at $3-5mm but worse vesting terms and lower chance of actually seeing returns materialize.
Vp4 800k 4.75m DAW UHCOL
Mind sharing your hours? Thanks.
How does good / bad leaver work at your firms? Do you lose it if you move to a competitor despite what has been vested?
At my firm you keep your vested carry.
It would be outrageous to lose your vested portion when leaving..
It’s pretty common if u go to a competitor vs retire or leave Industry some firms have clauses where you lose 50% but enforcement depends on your relationships
Title: VP1 (7.5 years of experience)
Fund size: $4.5B ish
City: LA
Cash: $445K
Carry: $1.0M DAW (getting shafted on carry) 😠
How did this happen? This seems way off market for fund size
If my suspicions are right, it’s a fund that notoriously pays under-market but often gives atypical profiles (not necessarily OP) a chance in finance, especially at the analyst level.
Platinum? Lol
What firm in LA does that
I should clarify that this DAW represents the market value today (or at least as of Q4 2024), aka marked to the value based on projected fund performance, and not based on a theoretical 2.0x fund. I haven’t run the math, but I think the baseline DAW would be around $1.5M-$1.75M if assuming 2.0x fund performance. I still think it’s low, but thought that would be helpful context as you never really know what your carry is going to be worth! We are raising another ~$2b-$2.5b fund (we have multiple fund strategies) and I’d expect another $400k-$600k DAWs from that one (this fund series specifically targets mid teens returns so the carry they would quote for this fund series would probably be $750k-$1m if it were targeting an 18%-20% IRR).
I think it’s quite shocking the difference in DAW across firms / fund sizes.
From the post, ranges from $1M DAW all the way up to $4.75M for VPs is a huge difference. Maybe you have a better WLB at LMM, but damn the $3M of extra carry at UMM/MF probably makes the longer hours worth it
MF will almost certainly pay out carry below quoted DAW while LMM has the call option of a 5x fund.
I saw a stat a few days ago that zero PE funds $10B+ have ever reached 2x DPI…
I think technically need to be solving for 1.8x DPI to get to a 2.0x assumed carry since that extra 0.2x is going to investment professionals.
I think that stat is off on zero PE funds 10b+ getting to 2x DPI though might be skewed by how publicly traded PE funds report returns. Believe KKR, Apollo, and Blackstone all have a few funds between them > 2.0x RVPI on invested though unclear if 1:1 to DPI.
VP4
MM ($2-4B fund size)
Tier 1 city
$600k cash
50 bps carry
Hard to convert to DAW as my carry allocation has stepped up each year. Carry in each deal based on how many bps you have at that time so can acculumate decent DAW if deploying a lot of capital
Cash comp probably on the lower side of market but decent lifestyle when not on live deal sprints (50-60 hrs)
What's VP1 comp at your firm?
Mid $400s cash and ~half the carry
Just curious - how many people actual stay long enough to actually receive carry?
Ive never really understood why folks think of their total compensation as anything other than cash + VESTED carry dollars at work within that year. It makes it much easier to compare comp figures across different funds with different vesting styles and DAW allocations.
For example, have a friend at a MM fund with $425k cash comp as VP1 but $2.5mm DAW vesting over 5 years, so for the next ~3 years (he only gets more carry once they raise a new fund) his total compensation is effectively $425k cash + $500k vested carry DAW = $925k total compensation (assuming flat cash which is obvs not true, but for simplicity purposes).
I have another friend at an UMM who gets $550k cash as a VP1 but receives annual carry grants (his carry grant is spread across all equity dollars invested that year across all funds pro rata for equity investment size) with a $1mm first year grant that vests over 3 years. So his first year compensation is $550k cash + $333k DAW = $883k. But in his second year he will get another carry grant for $1.2mm, vested over 3 years, so his second year comp is $550k cash (assume flat for ease of math) + $333k DAW from his first year grant + $400k from his second grant = ~$1.3mm total compensation.
Feel like everyone should be thinking about their compensation in this manner rather than quoting your total DAW because vesting is all that matters. For example, i have another friend who has a carry grant similar to example 2 (annual grants) but his annual grants vest over 7 YEARS. The firm quotes to him his total DAW over the next ~4 years as being slightly above market, but when you factor in how much he is vesting per year, his actual vested carry dollars after 4 years is around 50-60% below market or equivalent to a $250mm fund size IMO. Vesting is all that matters with carry
This is a great point. Two other things I'd add:
(i) Given how PE returns are trending, it's generally wise to hair cut the carry DAW you're quoted unless you're at a niche strategy that is primed to kill it over the next 5-10 years. Carry DAW is quoted at 2x gross MOIC but it's net of mgmt fees, so really returns need to be ~2.2x gross MOIC at a fund level (before fees) in order for you to get the entirety of your quoted DAW.. this is not easy for any fund above a couple billion.
(ii) Review your subscription docs for the clawback language. Oftentimes there are automatic clawbacks for a portion of your carry if you leave before a certain date, even if you're already vested.
Correct way is to take vesting, NPV the amount with an appropriate discount rate (c.15%), use sensible MOIC & carry payout timing assumptions, add an illiquidity discount, and adjust for expected probability of payout (given clawback clauses etc.)
If you do all usually you can divide by 20+ a quoted DAW amount to get an equivalent cash comp.
I think this is broadly right, but I would quibble with using a 15% discount rate if you’re already baking in a probability adjustment on MOIC, clawback, etc. Once you have done all of your probability weighting, I’d say you should discount at whatever the alternative return you’d expect is if you got cash up front to invest yourself (which is probably just the market so I would use something like 8%).
Don’t forget to account for deployment. Funds rarely get to 100% deployment which is what the DAW assumes
Dumb question but I am an aso at a LMM fund w/ 1% carry in a ~$250m fund that has a fund life of 5-13 years. Assuming 2x MOIC DAW would be 400k but might have to wait >10 years to realize it? Doesnt seem like a very good deal
Yeah if you’re coming in day 1 of the fund, it’s usually 3-4 yrs before the first realizations, and 10+ years to get the final realizations (maybe). I think a lot of young PE professionals don’t grok how long it takes to see every $ of their quoted DAW.. they have starry eyes about the total number, which the sr guys use to motivate the team to grind.
100bps of carry for an aso seems very generous that’s awesome. I got 50bps as a senior aso for same size fund
yea but dont think i will stick around to see it lol
Really? It seems kind of shit because cash comp is likely at a large discount and its worth potentially ~$400k >10 years down the line
Doesn't seem like a great deal
What is standard at your firm if they raise a new fund? Do they grant you the same DAW in new fund, same points in new fund, grant you a DAW in new fund that contemplates your existing DAW to holistically target a blended DAW, or something else?
Similarly, what do they do if fundraising is better or worse than expected? Do they make adjustments to the carry points implied by the DAW or keep points the same and your DAW is either higher or lower than planned?
Im going to get promoted later this summer (2026) to VP1, we just closed our Fund V last summer (2025) and so probably wont be back in market til 28.
how will my carry allocations work? how should they work? do i have to wait to the new fund or is there some typically reserved out of prior fund(s)
Every firm is different. I’ve seen a range from harsh (no carry / wait for next fund) to shadow carry only to full grant that starts vesting upon promo to full grant that back-dates vesting back to 2025 raise (super friendly).
All depends on the firm’s approach, trajectory, length of VP program, time since raise, etc.
Is there a current VP1 friend (promoted Summer 2025, so post-raise) at your firm that you can ask (if truly need to know right now)?
What I would expect is a carry grant that gets you a DAW in line with market. How that is distributed across existing funds is subjective. Can be determined by what portcos you are covering and therefore how to align incentives. The grant will be structured with a hurdle, otherwise you are getting something for free (tax trigger). Earlier funds are likely more mature and NAV will not increase much further so distributions would be nearer term but less upside. Reverse that for more recent funds.
Also, replying to myself, do folks typically think about financial (and tax) advisors when they move into K1 world? assume yes for tax and maybe for FAs?
I actually had a tax advisor/accountant long before VP1. IMO, well worth the money (always significantly below $1k) to outsource my tax returns, especially as carry and co-invest have gotten more complicated, but even prior. Just a chore that I don’t feel like doing and not worth messing up. Also nice to have someone on speed-dial for questions (no incremental fee).
No FA for me. Feels like we kind of do this for our job, so I should be able to handle myself at my current net worth.
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