VC Fund Economics
Management Fee Model
See how management fees reduce investable capital and break down annual fee budgets.
Fund Structure
Annual Budget Breakdown
Fee Analysis
Total fees over fund life
$8.75M
17.5% of fund — $41.25M investable
2% × 5 years
1.5% × 5 years
2 GPs × $300,000
30% of annual fee
Year-by-year fees
| Year | Rate | Fee |
|---|---|---|
| Year 1 | 2% | $1.00M |
| Year 2 | 2% | $1.00M |
| Year 3 | 2% | $1.00M |
| Year 4 | 2% | $1.00M |
| Year 5 | 2% | $1.00M |
| Year 6 | 1.5% | $750,000 |
| Year 7 | 1.5% | $750,000 |
| Year 8 | 1.5% | $750,000 |
| Year 9 | 1.5% | $750,000 |
| Year 10 | 1.5% | $750,000 |
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How to Use This Tool
Enter your fund size, management fee percentage, and fund life. The calculator shows your total fee income over the fund's lifetime and how much capital remains for actual investments.
Management Fees
Annual Fee = Fund Size × Fee % | Investable Capital = Fund Size - Total Fees
A $50,000,000 fund at 2% generates $1,000,000/year. Over 10 years, that's $10,000,000 in fees — meaning only $40,000,000 is available for investments. Most funds step down fees after the investment period.
Why This Matters
Management fees are your operating budget. They need to cover salaries, rent, travel, legal, fund admin, and everything else for 10+ years. Most first-time fund managers are shocked at how tight the budget is. A $25,000,000 fund at 2% only generates $500,000/year — barely enough for one person plus overhead.
What to Do With Your Results
- 1Build a 10-year operating budget — can management fees cover your planned team size?
- 2Model fee step-downs — how does your budget change when fees drop from committed to invested capital?
- 3Consider the impact on investable capital — every dollar in fees is a dollar not invested in startups.
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