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Carried interest

Also called: carry

In one line

The share of investment profits that fund managers (GPs) earn, typically around 20%, on top of returning capital to their investors.

In plain English

When a venture fund profits from investments like your company, the managers keep a slice — the 'carry' — as their reward. It mainly concerns funds, not employees directly.

If you were explaining it to a 5-year-old

The grown-ups who run an investment club keep a fifth of the winnings as their prize for picking good toys.

Why it matters when you sell

Carry explains how the funds on your cap table make money, and why they push for strong exits that also affect your shares.

Related terms

Liquidation preferencePreferred stockContinuation fundNet asset value (NAV)

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Sources

A general market-practice term. See how we define and source the glossary in our methodology. General information, not advice.

Educational information only — not financial, tax or legal advice, and not an offer to buy or sell any security. Definitions are general; your own documents and local law govern your situation. PrivateTechShares is independent and not a broker or marketplace.