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How the management fee is distributed between the management company and general partner company?

We (2 partners)asked the same question to Decile Base and got two contradictory answers:
  1. "In a venture capital firm, the management fee is typically collected by the Management Company and then distributed to the General Partners for their services in managing the fund's operations and investments. The exact distribution can vary based on the agreement between the Management Company and the General Partners. It's important to note that the management fee is separate from the carried interest, which is a share of the fund's profits that the General Partners may also receive."
  2. "Management fees are typically allocated to the General Partner (GP) as a percentage of committed capital. These fees are then used to cover the operational costs of the fund, including salaries, office expenses, and other administrative costs. The Management Company (ManCo) usually receives a portion of these fees for its role in managing the fund. The exact distribution between the ManCo and GP can vary and is typically outlined in the fund's Limited Partnership Agreement (LPA)."

The question remains - who collects and then distributes the Management Fee?
1 See in Base
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TL'DR - the Management Company.

The Management Company owns the brand and that is where the Managing Partners and employees are. The General Partner entity distributes the carried interest. LPs invest in the Limited Partner entity. Management fees are distributed from the Limited Partner entity to the Management Company.

You may also find this article helpful: https://govclab.com/2023/11/29/the-basics-of-vc-funds/

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