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In a smaller fund, it’s quite possible to make nothing or close to it for many, many years until your investments (or “carry” in them) become liquid.

Imagine a \$30m seed fund (not tiny), with 2 equal partners, and a 5% “capital commit” (i.e., the partners have to put in 5% of the money) and 2% “fees” per year. Add in 1 support staff at say \$80k a year including taxes and benefits, and an office at \$8k a month or \$100k a year.

• So each year in fees, the fund gets \$30m x .02 = \$600,000 to spend on salaries, administration, travel, etc.
• After staff expenses, that’s \$520,000.
• After rent, that’s \$420,000
• After travel, entertainment, legal, tax, finance, etc. let’s call it \$300,000 left.
• So each partner might seemingly get a \$150k salary. Maybe.
• But now, let’s remember that 5% capital commit, over 10 years. That’s \$1.5m total or \$750k each, over 10 years. Or \$75k a year.
• So that \$150k salary after taxes is at best, \$100k in California. And then they have to put in \$75k of after tax dollars as part of their capital contribution to the fund.
• Leaving a net (after taxes and capital contributions) salary of \$25k a year per partner on a \$30m fund! Living the high life in Silicon Valley, for sure.

Now imagine if the fund was smaller 😉

The bigger the fund, the more the math changes. And as you manage multiple funds (say 3 active ones at a time), the fees and carry do stack up.

A Managing General Partner in 3 funds of \$150m+ each might make \$1m in salary + carry each year. A more junior partner in the same funds might make \$300k a year. A non-partner would make a lot less.

But as you can see — it varies a lot.

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