What is the annual management fee per gp

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Assignment

You are planning to start a $30 million VC fund. You have two other partners (three GPs in total), and plan to impose a 2 percent management fee and 25 percent carried interest. The fund will have an 8 year life, with the first four years being for finding and making investments ($7.5 million per year) and the second four years for managing and harvesting. On average, your investments will and return 30 percent annually and run for four years, i.e., investments made in Year 1 will be harvested in Year 5.

a. What is the annual management fee per GP?

b. How much carried interest will each GP receive in each of the years 5-8?

c. What is the LPs IRR, assuming their full $30 million is put up at Time 0?

Reference no: EM131531352

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