March 17, 2026
Adapted from a Thelander panel with Jodie Thelander (J. Thelander Consulting), Robert Alonzo of Kaufman Rossin (fund administration), and Patrick Cassen of Greenberg Traurig (private funds law).
Investment firm compensation doesn’t exist in a vacuum — it’s shaped by how funds are structured, how carried interest is allocated, and how the back office is built. This panel brought together a compensation-data firm, a fund administrator overseeing $30B in assets, and a private-funds attorney to connect all three.
Capital Keeps Concentrating in Brand-Name Funds
PitchBook’s H1 2025 data set the scene: about $50B raised across 536 VC funds, but the ten largest funds accounted for nearly 26% of total commitments — up sharply from 17% in 2024 and just 8.6% in 2021. A small cohort of brand-name managers is securing most of the capital while the broader market faces constrained LP availability and tighter allocation budgets. GPs are slowing deployment to preserve reserves for follow-ons and bridge rounds, and many are leaving funds open longer to accumulate commitments. Notably, much first-time-fund capital now comes from teams spun out of established firms leveraging prior networks.
AUM Drives Compensation More Than Anything Else
Across fund types — VC, private equity, real estate, family office — assets under management has the largest, most consistent impact on compensation. Geography matters less than you’d expect: the data is ~85% US and no longer just Bay Area– or New York–centric, and comp is dictated more by investment strategy and AUM than location (though there is a meaningful US vs. Europe distinction). As firms accumulate vintages, roles proliferate — more VP, chief, director, and manager positions — reflecting growing infrastructure needs.
Outsource the Back Office — and Choose Partners Who Grow With You
A recurring theme for emerging managers: outsource as much as possible rather than building expensive internal infrastructure. Even a five-person shop with commitments from large institutions faces heavy, growing reporting requirements — and the answer to “do we really need all this?” is usually yes. Good fund administration lets a small team present as a much larger organization, and much of it can be structured as a fund expense. The advice: don’t take a short-term, cheapest-cost view; pick a partner with a deep bench who can grow with you and solve multiple pain points, because how you set up your first fund will shape your second, third, and fourth.
American vs. European Waterfalls
How carry gets distributed hinges on the fund’s waterfall. In a European waterfall, investors must receive a return of all their capital plus the preferred return before any carry is allocated to the GP; American waterfalls allow earlier carry on individual deals. In Thelander’s data, 72% of firms with a waterfall use the European structure — and in the current fundraising environment, the attorney noted managers who could argue for an American waterfall are often choosing European anyway, because it takes the issue off the table and wins points with investors. The fund administrator’s role is to maintain the official books and records, calculate P&Ls and valuation adjustments, and execute the allocation between LPs and GP based on those exact waterfall terms.
Carry, Vesting, and the Long Road to Cash
Compensation breaks into cash (base plus actual bonus, though some firms are base-only) and the carry components: carried interest, carry dollars at work, and sometimes an equity distribution. The classic 80/20 split holds, but vesting times have been lengthening, and “must be present to win” handcuffs mean departing professionals often forfeit unvested carry. Because it can take four, five, or seven years into a fund’s life before cash comes back, some firms now squeeze equity-style distributions out of successful portfolio companies to keep people engaged over the long haul. Management fees, tracked at the fund level, are a percentage of committed capital.
Carry Compresses Across Fund Vintages
A first fund of $250–$500M often grants larger carry percentages simply because the pie is smaller — and smaller funds have a harder time raising, so they give up more of their own compensation to get off the ground. But those elevated levels can’t persist into a second or third vintage if the firm succeeds. The director/principal level is a critical inflection point: it’s where professionals start to get into a more meaningful part of the fund, and where people leave if their compensation doesn’t feel competitive with their contribution. Roles like VP of Investor Relations are rising in both cash and carry as firms invest more in managing their LP relationships.
AI, and the Human Element
Firms are beginning to leverage AI for competitive intelligence, market analysis, due diligence, and the repetitive legal work no one enjoys — but the panel was clear that advisors who understand the people and dynamics, and who bring real substance, remain essential in this space. The enduring value they emphasized: stay nimble, and manage the balance between protecting your own interests and keeping investors and employees happy.
This article is adapted from a Thelander panel and is intended as general educational information, not legal, tax, or investment advice. For guidance specific to your firm, consult qualified compensation, legal, and fund-administration advisors.