Fund Structure
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Quick Answer
The phase of a fund's life after the investment period ends, focused on managing existing portfolio companies toward exits and distributing proceeds to LPs.
The Harvest Period is the phase of a venture fund's lifecycle that follows the investment period, during which the GP focuses on managing existing portfolio investments toward exits and distributing realized proceeds to limited partners. This period typically spans years 5-10 of the fund's life (assuming a 5-year investment period within a 10-year fund term). During the harvest period, the GP's primary activities shift from sourcing and making new investments to board governance, exit preparation, M&A facilitation, IPO readiness, and secondary sale execution. Management fees typically step down during the harvest period—often calculated on invested capital or NAV rather than committed capital, reflecting the reduced workload. The GP can still make follow-on investments from reserves during this period to protect ownership positions or support portfolio companies approaching exits.
In Practice
A fund enters its harvest period in Year 6 after deploying capital into 28 companies. Over the next 4 years, the GP helps 8 companies achieve exits (4 acquisitions, 2 IPOs, 2 secondary sales), generating $350 million in distributions from a $100 million fund. Management fees drop from 2% on $100 million committed capital ($2 million/year) to 2% on $60 million invested capital ($1.2 million/year). Three companies remain in portfolio as the fund approaches its 10-year term.
What good looks like
Why It Matters
The harvest period is where venture returns are actually realized. A GP's ability to navigate portfolio companies to successful exits during this phase determines the fund's ultimate performance. LPs should evaluate a GP's exit track record as carefully as their investing track record, as even great investments can underperform with poor exit execution.
VC Beast Take
The harvest period reveals which GPs are truly skilled operators versus lucky stock pickers. It's where reputations are made—LPs remember funds that actively helped companies through exits versus those who just waited. The best VCs often generate their highest multiples during harvest period through strategic guidance, not just financial engineering.
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How does a venture capital fund work?
A VC fund pools capital from institutional investors and high-net-worth individuals, then deploys it into early-stage startups over several years in exchange for equity, aiming to return the capital with large gains when those companies exit via acquisition or IPO.
How does a venture capital fund work?
A VC fund pools capital from institutional investors and wealthy individuals, then deploys it into early-stage startups over several years in exchange for equity, aiming to return the capital with large gains when those companies exit.
What is "2 and 20" in venture capital?
"2 and 20" refers to the standard VC fee structure: a 2% annual management fee on committed capital, plus 20% carried interest on profits.
The Harvest Period is the phase of a venture fund's lifecycle that follows the investment period, during which the GP focuses on managing existing portfolio investments toward exits and distributing realized proceeds to limited partners.
Understanding Harvest Period is critical for founders navigating the fundraising process. It directly impacts deal terms, valuation, and the relationship between founders and investors.
Harvest Period 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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