I joined a first-time VC fund as an Associate in 2019. Fund I was $100m and we're looking to go out and raise Fund II this year and hoping to hit $250-300m (which is not bad for a Series A/B fund that's only been in business for a few years). I've been told by the Partners I'll get carry in Fund II and want to know what the market looks like.
For context, I'm performing well and have been promoted since I joined. I have 7 years work experience and am at the Senior Associate / VP / Investment Manager level (titles seem to vary by fund a lot). I sourced a lot of our deals in Fund I and led on DD but Partners always take the board seat and it's their brand and credentials that wins us deals rather than mine. Carry in Fund I was 50:50 between the Partners. For Fund II, it will be split among same two Partners plus me and one other junior in the exact same situation. There are two new associates who joined recently and probably won't get carry.
Curious to hear from people with intel from VC or LMM PE or growth equity. If anyone has stories about people who have joined somewhere early I'd love to hear it as I would expect to get above-market carry at this stage vs someone who is mid-level at a big fund that's been around for 30 years.
I joined a debut growth equity fund in 2019 that was roughly the same size range as your fund I, and we're now nearing the end of closing a fund II that's also in the range of your fund's target. As an associate, I didn't receive carry but did receive coinvest. I'll be getting the senior associate title at yearend, which would mark just over 3 years of total PE associate experience, with the VP title coming 1 year thereafter.
In terms of comp, our partners seem to want to maintain some hierarchy / structure and so there are a decent number of junior and mid-levels for the size of the fund, which while can be good also probably limits the upside unfortunately. Senior Associate carry is 1% in Fund II, and VP carry is 2% in fund II. Cash comp is definitely below market and always comes with the caveat of "will be increasing as more funds are raised".
Happy to provide more detail via PM if it'd be helpful. If you've sourced deals and are also the only non-Partner employee, I would be negotiating for a good amount of carry assuming your cash comp is also on the lower end.
That's super helpful. Sounds like total non-partner carry in Fund II is 10-20% based on your numbers?
Think that's right: I'd guess closer to the ~10% range towards 3 mid-levels (rest of firm are associates)
Were you the first associate hire / were there any mid-level professionals above you when you joined? Coming from the LMM PE world, I would have expected some carry from the get go if you were the only associae, assuming cash comp was on the lower side. Senior associates at my current shop get minimal carry but it's a pretty established fund with lots of hierarchy.
Out of curiosity, do you mind sharing your cash comp? I've been exploring an opportunity with a debut VC but not sure what the benchmark should be.
Me and the other guy that joined were first two associate hires. No other team apart from the partners. Obviously asked for carry on the way in but there was clearl no room for negotiation.
I'm based in London and my total cash comp in my first year was £80k, second year made £100k and would expect £120k this year. The US Associate was basically same converted to dollars with maybe +10% as market just pays more in the US. It was weighted 75:25 base to bonus. Conversation with peers told me base is low but total comp is not far off lots of other funds in London running funds $100-400m.
This goes out the window at likes of Accel / Index where they have $bn funds and Associate pay is often £120k base with up to 100% bonus. That said, they tend to recruit people out of growth equity / other VC funds with more experience so its apples and oranges. This was my first job out of consulting and was a sideways move comp wise but much better lifestyle and more interesting work. Also believe long term comp could be excellent if I do well and the fund performs.
Hey mate - mind if I PM you? Small world in London VC :)
Hi mate, sent you a PM about london VC comp. Grateful if you could take a look! Thx
I was given 1% carry as the first associate hire at a debut LMM PE fund.
For a fund that size and such few staff, partners retaining so much carry seems a bit greedy. Then again, at my last fund, our founder kept 95% of the carry and then the majority of the team left. For your situation I would expect around 4-6% for fund II.
1-3mm of total carry at a 2x. So in a $250mm fund that’s 2-6%.
I've heard 1-2% is typical.
Given your work experience and the fact that it sounds like you have been doing a lot of the heavy lifting from a sourcing and DD perspective, plus you're part of the founding team, I'd ask for 5% in Fund II. Expect to be cut back from that but I'd certainly use it as an opening bargaining position. Plan B might be some sort of incentive structure that starts you at 2-3% but lets you get up to 5% carry if you hit certain metrics that you can agree on with the partners. This also helps you to all be aligned on what your development pathway looks like and if there's a pathway to partner for you.
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