VC Fund Economics
Waterfall Distribution Calculator
Model venture capital fund distributions — preferred return, catch-up, carried interest. See exactly how GP and LP splits work.
Fund Terms
Waterfall Structure
LP-friendly: carry paid only after all capital + preferred return is returned.
100% of profits go to GP until they reach their carry share.
Distribution Summary
LP receives
$129.00M
2.63x net multiple
GP receives
$31.00M
$18.84M carry + $10.00M fees
Waterfall Breakdown
| Tier | LP | GP | Total |
|---|---|---|---|
Return of Capital | $49.00M | $1.00M | $50.00M |
Preferred Return | $56.79M | $1.16M | $57.95M |
GP Catch-Up | $0 | $13.04M | $13.04M |
Profit Split | $23.21M | $5.80M | $29.02M |
| Total | $129.00M | $21.00M | $150.00M |
$150.00M returned on $50.00M
$129.00M on $49.00M contributed
18.8% of total profits
2% x 10 years
80.0% of fund size
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How to Use This Tool
Set your fund size, total distributions, fee structure, and carry terms. Toggle between European and American waterfall to see how the distribution structure affects GP and LP payouts. Adjust the catch-up provision to model different LPA terms.
European Waterfall
1. Return of Capital → 2. Preferred Return → 3. GP Catch-Up → 4. Profit Split
In a $50M fund returning $150M with an 8% hurdle and 20% carry: LPs first get their $50M back, then their preferred return (~$58M over 10 years). The GP catches up, then remaining profits are split 80/20. The American waterfall skips the preferred return, letting the GP take carry deal-by-deal.
Why This Matters
The waterfall structure determines when and how much GPs earn from fund performance. European waterfalls protect LPs by requiring full capital return before carry. American waterfalls let GPs earn carry earlier but create clawback risk. Understanding these mechanics is essential for LPA negotiation and fund economics.
Industry Benchmarks
Standard Carry
20%
Industry standard for most VC funds
Common Hurdle
8%
Annual preferred return before carry
GP Commitment
1–3%
GP skin in the game
Catch-Up
100%
Most LPAs include full GP catch-up
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