I observed that most VCs rely on predictable management fees rather than the highly contingent carry, reinforcing the expectation that most VCs depend on fees for the bulk of their revenue.
I note that the primary revenue source for most VCs is management fees rather than carry.
A ₹100 Cr fund pays ₹20 Cr total management fees over 10 years (₹2 Cr per year).
If a ₹100 Cr fund returns 4×, the carry equals ₹60 Cr (20 % of profits).
I reject discounting management fees and maintain the standard fee level.
I note that Indians love a good bargain – it’s in our DNA and that mindset has crept into VC pricing.
I reflected on the VC economics that drive the industry.
- 75 % of startups never return meaningful cash. - Less than 4 % ever hit 10× returns. - Management fee: 2 % annually. - Carried interest: 20 % of profits.