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What Discounts Should Be Offered to Early LPs: Management Fee or Carry Discount and How Much?

What kind of discounts make sense for key early LPs? For example if I have a good friend and multi-year partner who wants to come in and can put in 3-5% of the fund and he asks for a discount to go at higher end of that. My fees are typical 2/20. Should I offer management fee discount or carry discount? How much is reasonable?
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We strongly recommend that you do not discount your fees. You normally discount fees through a Side Letter, and Side Letters are public to other Limited Partners. So, every Limited Partner will ask for a similar deal, which places you in a bad negotiating position. If you want to offer something, offer a discount on SPVs to invest in your follow-on into portfolio companies, and you can offer this as a handshake agreement.

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