How VCs Make Money

How venture capitalists generate returns — covering the valuation and exit strategies of their investments. Watch the full short — free, no account needed.

What this short covers

How venture capitalists generate returns — covering the valuation and exit strategies of their investments.

Transcript

Here's how VCs make money. So, first of all, VCs have LPs, limited partners. Those are the ones that invest in the funds of that venture capital firm. Those funds are actually managed by the general partners at the venture capital firm. Those will be the ones that decide with their team what are the ultimate startups that receive that money. So basically LPS the limited partners invest in the funds while the general partners the VCs are the ones that decide where those funds will be allocated. So then when a fund exits either via acquisition IPO or a secondary whatever investments that were given by the limited partners are going to be distributed equally and proportionally to those LPS. So ultimately the VCs will make money from the carry which are the profits that where they're going to be taking 20% of that and then also on the management fee which is the total pool of capital where

they're going to be getting 2%. If you're looking to raise money, go to start fundraising.com and supercharge with AI.

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•By Alejandro Cremades