Fund Structure
AUM
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Quick Answer
Assets Under Management — the total market value of investments a VC firm manages on behalf of its limited partners across all active funds.
AUM (Assets Under Management) refers to the total dollar value of capital a venture capital firm currently manages. This includes committed but uncalled capital (dry powder), deployed investments at cost, and the marked-up or marked-down value of the portfolio depending on context.
AUM is one of the primary metrics used to measure the scale of a VC firm. A firm with $500M AUM is considered mid-size; a firm with $5B+ AUM is a mega-fund. AUM directly influences management fee revenue — most funds charge 2% of committed capital annually during the investment period, stepping down to 1–1.5% thereafter.
Note that AUM in venture is reported differently than in public markets: some firms use committed capital as AUM, others use fair market value of the portfolio. The lack of standardization means AUM comparisons across firms can be misleading.
In Practice
Sequoia Capital manages over $85 billion in AUM across its various global funds. A newly launched emerging manager might raise a debut fund of $30M, putting them at $30M AUM — enough to write $1–3M checks into 15–25 companies.
Why It Matters
AUM determines a firm's check-writing capacity, portfolio construction, and fee revenue. LPs look at AUM trajectory (growth or decline across fund vintages) as a signal of firm health and LP satisfaction. Founders care about AUM because it affects how much a VC can follow on in future rounds.
VC Beast Take
The AUM arms race in VC has complicated the industry. Mega-funds with $10B+ AUM can only generate venture-scale returns if they're writing $100M+ checks — which pushes them into growth or late-stage investing regardless of what their marketing says. Meanwhile, small managers with $25–50M AUM often generate the best IRRs but can't raise large enough funds to sustain a team long-term. The sweet spot — $200–500M — is where most institutional-quality firms operate.
Related Concepts
Further Reading
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How to Write an LPA: The Limited Partnership Agreement Guide for Fund Managers
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Frequently Asked Questions
What is AUM in venture capital?
AUM (Assets Under Management) refers to the total dollar value of capital a venture capital firm currently manages. This includes committed but uncalled capital (dry powder), deployed investments at cost, and the marked-up or marked-down value of the portfolio depending on context.
Why is AUM important for startups?
Understanding AUM is critical for founders navigating the fundraising process. It directly impacts deal terms, valuation, and the relationship between founders and investors.
What category does AUM fall under in VC?
AUM falls under the fund-structure category in venture capital. This area covers concepts related to how venture capital funds are organized, managed, and governed.
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