Dividing the Pie: How Venture Fund Economics Work [Part I]

Before we dive into the details on how the economics work on an early stage venture fund, let’s cut right to the chase. Running an early stage venture fund is not an easy way to get rich quick. In fact, it’s probably the most amount of work for the least amount of income in the world of private equity.
Don’t get me wrong, with a couple lucky outcomes, you can make good money with a small venture fund, but you won’t be buying a private jet with your profits. Before you devote the next 10+ years of your life to raising a venture fund and then managing the fund to its end-of-life, it helps to understand how the economics of a fund work for the GPs.