VC salaries benchmarking

Based on the most helpful WSO content, here’s what you need to know about compensation and carried interest for GPs at VC funds:

1. Base Salary and Management Fees:

   • At the GP level, management fees can contribute significantly to compensation. For a $100M fund, management fees (typically 2% annually) would amount to $2M per year. This pool is shared among the GPs and used for operational expenses.
   • Base salaries for GPs at smaller funds like this are generally lower compared to larger funds. Expect a range of $250K to $1M, depending on the fund's structure, geography, and the number of GPs sharing the fees.

2. Carried Interest:

   • Carried interest is the primary driver of wealth at the GP level. For a $100M fund, assuming a standard 20% carry, the total carry pool would be $20M.
   • This carry is typically split among the GPs and other senior professionals. If there are several GPs, your share might range from 1% to 5% of the total carry pool, depending on your contribution and negotiation. For example, a 2% share of the carry would equate to $400K in carry dollars, subject to fund performance and vesting schedules.

3. Vesting and Timing:

   • Carried interest often vests over a period of 5-7 years, aligning with the fund's lifecycle.
   • It’s important to note that carry payouts are tied to fund performance and exits, meaning it could take 6-7 years or more before you see significant payouts.

4. Additional Considerations:

   • As a venture partner transitioning to a GP role, your compensation might initially be lower, with a heavier reliance on carry and performance-based incentives.
   • GPs are often required to invest their own capital into the fund, which could range from hundreds of thousands to millions of dollars, depending on the fund's expectations.

If you’re negotiating, ensure that your carried interest is clearly defined and contractually bound, including vesting terms and your share of the carry pool. This will protect you from potential disputes down the line.

Sources: Q&A: VC General Partner at Top Fund, Paying for carry at fund, Top Growth firms comp out of undergrad, Data: Average Private Equity Compensation and Carry from Associate to Managing Partner