Model your fund
MOIC = total exit proceeds ÷ fund size, before fees and carry. Used for illustration — not a return forecast.
| Waterfall step | Amount |
|---|---|
| Total exit proceeds (gross) | $75.0M |
| Return of capital to LPs | $25.0M |
| Preferred return to LPs | $23.9M |
| GP catch-up | $6.0M |
| Remaining profit — LP share | $16.1M |
| Remaining profit — GP carry | $4.0M |
| Total to LPs | $65.0M |
| Total carry to GP | $10.0M |
What is a 2 and 20 fee structure?
2 and 20 refers to the standard VC and PE fee structure: a 2% annual management fee on committed capital, plus 20% carried interest (carry) on profits above the return of capital and preferred return. Management fees cover fund operating costs — salaries, legal, admin, travel. Carry is the GP's incentive compensation, only earned if the fund is profitable.
What is a GP catch-up?
A GP catch-up is a waterfall provision that lets the general partner receive 100% of distributions — after the preferred return is paid to LPs — until the GP's cumulative share of total profits reaches the agreed carry percentage. After the catch-up completes, remaining profits split according to the carry ratio, commonly 80% LP / 20% GP.
European vs. American waterfall
A European (whole-fund) waterfall returns all committed capital and the preferred return to LPs before the GP receives any carry, calculated across the entire fund. An American (deal-by-deal) waterfall calculates carry on each individual deal as it exits, letting the GP earn carry earlier — but with clawback risk if later deals underperform. European waterfalls are more LP-friendly and are the default at most institutional funds; American structures are more common in smaller or newer funds negotiating GP-friendly terms.
Once your fund economics are set, find your LPs
Altura Data's investor database gives emerging GPs verified, structured LP and family office contacts — filterable by AUM, geography, and stage focus — ready to import into your CRM.
Frequently asked questions
What is a 2 and 20 fee structure?
2 and 20 refers to the standard VC and PE fee structure: a 2% annual management fee on committed capital, plus 20% carried interest on profits above the return of capital and preferred return. Management fees cover fund operating costs; carry is the GP's incentive compensation, only earned if the fund is profitable.
What is a GP catch-up?
A GP catch-up is a waterfall provision that lets the general partner receive 100% of distributions — after the preferred return is paid to LPs — until the GP's cumulative share of profits reaches the agreed carry percentage, typically 20%. After the catch-up, remaining profits split according to the carry split, commonly 80% LP / 20% GP.
European vs American waterfall — what's the difference?
A European (whole-fund) waterfall returns all committed capital and preferred return to LPs before the GP receives any carry, calculated across the entire fund. An American (deal-by-deal) waterfall calculates carry on each individual deal as it exits, letting the GP earn carry earlier but with clawback risk if later deals underperform. European waterfalls are more LP-friendly and common in institutional funds.
What hurdle rate do most VC funds use?
Most VC and PE funds use a hurdle rate (preferred return) of 6–8% annually, compounded over the holding period. This is the minimum return LPs receive before the GP participates in profit-sharing via carry. Some early-stage VC funds waive the hurdle entirely given the higher target returns of venture investing.