New fund carry

Based on the most helpful WSO content, here’s what you need to know:

1. Carry for Associates in New Funds:

   • At the Associate level, carry is not very common, especially in larger, more established funds. However, in smaller or newer funds, it can be more negotiable. A range of 0.1% to 0.5% of the carry pool is considered fair for Associates or Senior Associates. This is often more of a gesture by the firm rather than a significant monetary gain early on, as carry payouts typically take years to materialize.

2. GP Co-Invest:

   • GP co-invest opportunities are more likely to be offered at senior levels, but in smaller or newer funds, it could be negotiable. If offered, you would likely need to "buy in" to the GP capital commitment. For example, if the GP is committing 5% of the fund and you are allocated 2% of the carry, you might need to fund a proportional LP commitment (e.g., $200K for a $10M GP commitment). Some firms may offer loans or other mechanisms to help fund this.

3. Cash Compensation:

   • Your cash comp of $140-180K is on the lighter side, especially for a high-cost-of-living (HCOL) city. This could be a point of negotiation, particularly if the carry or co-invest terms are not favorable.

Recommendations:

• Carry: Aim for 0.2%-0.5% of the carry pool, given the small team size and your role in a new fund. Highlight your contributions to the fund's success as leverage.
• GP Co-Invest: Ask if co-investment is an option and clarify the terms (e.g., whether leverage or loans are available to fund your commitment).
• Cash Comp: If the carry and co-invest terms are not strong, push for higher cash compensation to offset the risk and delayed upside of carry.

Let me know if you need help strategizing further!

Sources: Paying for carry at fund, Differences between Co-invest and Secondaries?, What returns have you achieved from co-investing in your fund?, Carried interest for Associates / Senior Associates?