A typical medium sized or larger ($100m+ fund) model will work like this:
- ~10% goes to fees (really more, but they’ll try to ‘recycle’ some and reinvest some proceeds so it ends up 10% to fees)
- 30% goes to initial checks for new investments; and
- 60% goes to reserves for second, third, etc. checks into existing investments.
So in a typical $100m fund, only $30m will go into brand new investments. If their typical check size is $3m, then that’s just 10 new investments.
Small funds will often be more like 10%:45%:45%. And sometimes, the fees aren’t really recycled at all, in which case they eat up 20% (or more in a small fund, often 25%) of the fund.
But 10/30/60 is a good standard model to understand where the money goes over the decade+ long life of a fund.