Carried Interest

Carried Interest is the share of the capital gains of a venture capital fund which are allocated to the general partner or manager of the fund as compensation. Typically, a fund must return the initial capital plus a preferential rate of return to the limited partner before the general partner can share in the profits. The general partner will usually receive Carried Interest equal to around 20% of the profit earned, although some successful firms can receive up to 25% or 30%.