Carried Interest
Carried interest ("carry") is the share of a fund's profits, typically 20%, that a general partner keeps as compensation once investors have recovered their capital.
Carried interest, often shortened to "carry," is the share of a fund's profits that the general partner keeps as compensation, on top of the flat management fee charged on assets under management. The standard structure in venture capital and private equity is "2 and 20": a 2% annual management fee plus 20% of the fund's profits once investors have gotten their capital back.
Carry only pays out on gains, not on the capital itself, which aligns a fund manager's incentives with actual investment performance rather than simply raising a large fund and collecting fees. Israeli growth funds such as Qumra Capital and fund-of-funds vehicles like Vintage Investment Partners both structure their economics around a similar carry model, though the split and hurdle rate can vary by fund and by vehicle type.
A "hurdle rate" is a minimum return the fund must clear, often 8% annually, before the general partner starts collecting carry. Below the hurdle, all profits go to the limited partners.