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Adithya Pappala
Zero Fund-VC|Investi... • 7m
#9TDAYVC- DAY-14 🎯What is Hurdle Rate? 🎯What is Carry Fees? 🎯The preferred returns are also called as “Hurdle Rate” in VC & P.E Funds. It is the threshold return that LP’S should receive prior GP’S receive. In developed markets, The hurdle rate is lower & it’s around 8%. In Indian Market, Hurdle Rates in VC & PE are meant to be higher than the international market according to historical average returns & compared to stock market & therefore it could be around 10-12%. The purpose of having a hurdle rate is set the expectations of Investors as a benchmark rather than the guaranteed returns. Investors always expect to be outpeform the hurdle rates Consistently & therefore build the track record. 🎯Hurdle Returns & Carry fees are both different where Hurdle returns are mostly must expected returns & Carry is if you outperformed your hurdle rate & then carry Fees is applied.Generally The structure is in 2-20% where 2 is Management Fees & 20 is Additional Returns. VC is HARD!
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Adithya Pappala
Zero Fund-VC|Investi... • 7m
If you are not frequent on Medial, Then Follow here: https://www.linkedin.com/in/adithya-p-070600202/ Access more VC for in- detailed knowledge here: https://substack.com/@9tdayvc If you want to join the 9TDAYVC Community of Founders & Investors. Then DM!!
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