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Do You Have to Commit Capital for Your Carried Interest?

For our November Digest, we’re looking at committed capital and if you have to commit capital for your carried interest. First, we need to define what this means. Committed capital is the percentage that the General Partners (GPs) contribute to the overall capital of the fund. 

So, why is this important? It shows how much skin GPs have in the game by indicating the amount of cash compensation they are contributing into the fund(s). Let’s jump in using data from the Thelander-PitchBook Investment Firm Compensation Survey. 

Chart 1 shows the percentage of the committed capital that the GPs have to contribute year-over-year (YoY). We see the following:

  • The two most popular options are in the 0-1% and the 1.1-3% range. 
  • 1.1-3% has grown in popularity since 2021. It increased from 37.1% to 43.7% in 2023. 
What percent of the committed capital do the GPs have to contribute?

Chart 2 shows the percentage of the committed capital that the GPs have to contribute by AUM. Here, we see that the larger the AUM, the larger percentage of committed capital. 

What percent of the committed capital do the GPs have to contribute?

Chart 3 looks at what percent of capital the investment professional contributes to the most recent fund for their carry? We see that:

  • Managing general partners are contributing 37.8% when there is less than $500 million in AUM, compared to 30.0% when there is more than $500 million in AUM (size of most recent fund). 
  • The same pattern can be seen for the other three job positions as well. 
What percent of capital does the investment professional contribute to the most recent fund doe their carry?

As we approach the end of the year, Thelander has all your compensation needs covered. J.Thelander Consulting and PitchBook invite you to participate in the annual Investment Firm Salary Increase & Bonus Survey. There is no cost to participate and all respondents will receive a complimentary overview report with salary increase percentages, bonus factors, bonus amounts, and more. All data is published in aggregate only with no individual names or firm names reported. 

Participate In Investment Firm Salary Increase & Bonus Survey For More Compensation Data

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