waterfalls
Last updated
Quick Answer
The distribution step where the sponsor receives a larger share until the agreed economics are reached.
A catch-up clause allows the sponsor to 'catch up' to the negotiated carry split after investors have received their priority return. It is a bridge between the preferred return and the long-run sharing ratio. The details are highly economic, so catch-up mechanics should always be modeled explicitly.
In Practice
Example: A sponsor or operator uses Catch-Up when building content around Waterfalls and the Distribution Models workflow.
Why It Matters
Catch-Up matters because it is part of the operating vocabulary for Waterfalls and supports deeper internal linking, clearer schema markup, and stronger topical authority.
VC Beast Take
SponsorBeast uses Catch-Up as an entity in the private capital ontology, not just as a keyword.
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A catch-up clause allows the sponsor to 'catch up' to the negotiated carry split after investors have received their priority return. It is a bridge between the preferred return and the long-run sharing ratio.
Understanding Catch-Up is critical for founders navigating the fundraising process. It directly impacts deal terms, valuation, and the relationship between founders and investors.
Catch-Up falls under the waterfalls category in venture capital. This area covers concepts related to important concepts in venture capital.
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