When to ask for carry? Junior VC

Based on the most helpful WSO content, carry discussions for junior roles like Associate in VC are not very common, especially at larger funds. Here's what you need to know:

1. Timing for Carry Discussions:

   • As an Associate, carry is rarely offered because firms often view this role as more transient (e.g., pre-MBA roles).
   • If you're looking to have this conversation, it might be more appropriate after proving your value over 1-2 years, particularly if you have demonstrated strong sourcing ability and deal contributions.

2. Standard for Associate/Principal Levels:

   • At the Associate level, carry is typically not standard, especially in funds with AUM >$1B. However, smaller funds or those with $1B AUM are more likely to offer carry to compensate for lower cash comp.
   • At the Principal level, carry becomes more common. For example, at a $1B fund, a Principal might expect 0.5%-1.5% of the carry pool, depending on fund size, performance, and individual contributions.

3. Aligning Incentives:

   • If you want to align your incentives with the fund's success, you could propose a carry allocation tied to your sourcing performance. Highlight your ability to bring in high-quality deals and how that directly impacts fund returns.
   • Be prepared to negotiate and potentially accept a pay cut, as you mentioned, to make this more appealing to the firm.

4. Key Considerations:

   • Timing is crucial. Firms are more likely to entertain carry discussions during fundraises or after you've proven your value.
   • Understand the fund's structure and culture. Larger funds may have rigid policies, while smaller funds might be more flexible.

If you're confident in your sourcing ability and want to push for carry, frame the conversation around your contributions and how aligning incentives benefits both you and the firm.

Sources: Confused about carry at PE Fund, Carried interest for Associates / Senior Associates?