The Hurdle Rate is the minimum required rate of return that must be achieved before performance-based compensation is paid, most commonly in private equity/VC carried interest waterfalls. In fund terms, the Hurdle Rate is intended to align incentives by ensuring LPs receive a baseline return first, and the Hurdle Rate can be structured as preferred return, catch-up, or tiered carry.
Ryan RobertsStartup Lawyer
Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration.
