Carried Interest

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Home Startup Terms Glossary Carried Interest

What is Carried Interest?

Carried interest is what managing investors take from a startup as compensation for their contributions. This amount is generally in addition to their management fees. It is usually calculated as a percentage of the total fund and profits earned.

A carried interest rate can range from 2 to 20 percent. Payments can take numerous forms, including cash, capital gains, dividends, royalties, or interest.

Carried Interest Examples

Examples of investors who take carried interest include:

  • Example 1. Hedge fund managers
  • Example 2. Private equity executives
  • Example 3. Venture capital partners
  • Example 4. Financial advisor partners
  • Example 5. Executive board members

Learn more about paying carried interest with this article .

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