- Management fees are usually set in the fund documents upfront, most importantly the LPA.
- They are typically based on committed capital and are often front-loaded:
- about 3% to 3.5% during the 3 to 5 year investment period
- then about 1% to 1.5% afterward
- The commonly quoted “2%” is usually the average over the full life of the fund, not a flat 2% every year.
- The fund generally begins charging management fees at or after the first close, according to the fee schedule in the LPA. In some structures like Start Fund, fees may begin effectively as soon as the first LPs close.
References:
- https://decilehub.com/base/1-general_questions/163512-how-is-the-management-fee-typically-structured-over-the-life-of-the-fund-and-can-the-gp-change-the-rate-year-to-year
- https://decilegroup.com/articles/vc-lab-cohort-22-info-session
- They are typically based on committed capital and are often front-loaded:
- about 3% to 3.5% during the 3 to 5 year investment period
- then about 1% to 1.5% afterward
- The commonly quoted “2%” is usually the average over the full life of the fund, not a flat 2% every year.
- The fund generally begins charging management fees at or after the first close, according to the fee schedule in the LPA. In some structures like Start Fund, fees may begin effectively as soon as the first LPs close.
References:
- https://decilehub.com/base/1-general_questions/163512-how-is-the-management-fee-typically-structured-over-the-life-of-the-fund-and-can-the-gp-change-the-rate-year-to-year
- https://decilegroup.com/articles/vc-lab-cohort-22-info-session