Avinash A.’s Post

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RISC-V Cores Staff Software Engineer @ Tenstorrent

The traditional '2 and 20' venture capital fee structure is being viewed as outdated by fund in India, prompting a shift towards more flexible models that align better with domestic investor expectations 2% fee made sense when funds were smaller, around $100 Mn in corpus. However, with fund sizes now exceeding $1 Bn and lasting up to 15 years, management fees have surged. Over time, these fees can eat up 37%-38% of the capital, leaving less than 60% for actual investments. To meet investor expectations of a 5x return, funds would need to generate 9x or more on their invested capital—an increasingly difficult feat. Globally, there’s growing concern that the “2 and 20” model disproportionately benefits fund managers while leaving LPs with limited returns. Investors are now pushing to change this model. The best LPs are those that understand the importance of the end destination and not necessarily the journey. And when fund structures are aligned to maximise returns for LPs, this also maximises carried interest for GPs, creating something of a win-win. https://lnkd.in/gEDDUUMm

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