{"id":280257,"date":"2023-11-22T16:17:00","date_gmt":"2023-11-23T00:17:00","guid":{"rendered":"https:\/\/jthelander.com\/?p=280257"},"modified":"2023-11-22T16:17:00","modified_gmt":"2023-11-23T00:17:00","slug":"do-you-have-to-commit-capital-for-your-carried-interest","status":"publish","type":"post","link":"https:\/\/brightturn.io\/?p=280257","title":{"rendered":"Do You Have to Commit Capital for Your Carried Interest?"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\">For our November Digest, we&#8217;re looking at&nbsp;committed capital and if&nbsp;you have to commit capital for your carried interest. First, we&nbsp;need to define what this means.&nbsp;<strong>Committed capital<\/strong>&nbsp;is the percentage that the General Partners (GPs) contribute to the overall capital of the fund.&nbsp;<br><br><strong>So, why is this important?<\/strong>&nbsp;It shows how much&nbsp;skin GPs have in the game&nbsp;by indicating&nbsp;the amount&nbsp;of cash compensation they are contributing into the fund(s).&nbsp;Let&#8217;s jump in using data from the&nbsp;<a href=\"https:\/\/survey.jthelander.com\/surveys\/2\/\" target=\"_blank\" rel=\"noreferrer noopener\">Thelander-PitchBook Investment Firm Compensation Survey<\/a>.&nbsp;<br><br><strong>Chart 1<\/strong>&nbsp;shows the percentage of the committed capital that the GPs have to contribute year-over-year (YoY). We see the following:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The two most popular options are in the 0-1%\u00a0and the 1.1-3% range.\u00a0<\/li>\n\n\n\n<li>1.1-3% has grown in popularity since 2021. It increased\u00a0from 37.1% to 43.7% in 2023.\u00a0<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-image img-border\"><img decoding=\"async\" src=\"https:\/\/jthelander.com\/wp-content\/uploads\/ad511165-54d8-e5dd-8518-1620fc62a30f.png\" alt=\"What percent of the committed capital do the GPs have to contribute?\"\/><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Chart 2<\/strong>\u00a0shows the\u00a0percentage of the committed capital that the GPs have to contribute\u00a0by AUM. Here, we see that the larger the AUM, the larger percentage of committed capital.\u00a0<\/p>\n\n\n\n<figure class=\"wp-block-image img-border\"><img decoding=\"async\" src=\"https:\/\/jthelander.com\/wp-content\/uploads\/ebc04db7-632f-2102-5c4a-153b9ab8af5f.png\" alt=\"What percent of the committed capital do the GPs have to contribute?\"\/><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Chart 3<\/strong>&nbsp;looks at what percent of capital the investment professional contributes to the most recent fund for their carry? We see that:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Managing general partners are contributing 37.8%\u00a0when there is less than $500 million in AUM, compared to 30.0% when there is more than $500 million in AUM (size of most recent fund).\u00a0<\/li>\n\n\n\n<li>The same pattern can be seen for the other three job positions as well.\u00a0<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-image img-border\"><img decoding=\"async\" src=\"https:\/\/jthelander.com\/wp-content\/uploads\/b8ee7b59-4217-fbd1-8787-0abb34bbbc06.png\" alt=\"What percent of capital does the investment professional contribute to the most recent fund doe their carry?\"\/><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>As we approach the end of the year, Thelander has all your compensation needs covered.\u00a0<\/strong>J.Thelander Consulting and PitchBook invite you to participate in the annual\u00a0<a href=\"https:\/\/survey.jthelander.com\/surveys\/1002\/\" target=\"_blank\" rel=\"noreferrer noopener\">Investment Firm Salary Increase &amp; Bonus Survey<\/a>. There is\u00a0no cost\u00a0to participate and all respondents will receive a\u00a0complimentary overview report\u00a0with salary increase percentages, bonus factors, bonus amounts, and more. All data is published in aggregate only with no individual names or firm names reported.\u00a0<\/p>\n\n\n\n<p class=\"has-text-align-center btn-post wp-block-paragraph\"><a href=\"https:\/\/survey.jthelander.com\/surveys\/1002\/\" target=\"_blank\" rel=\"noreferrer noopener\">Participate In Investment Firm Salary Increase &amp; Bonus Survey For More Compensation Data<\/a><\/p>\n\n\n\n<p class=\"has-text-align-center wp-block-paragraph\"><strong>Know someone that would find this data interesting?<\/strong><br>Invite them to subscribe to the\u00a0<a href=\"https:\/\/jthelander.com\/subscribe\/\" target=\"_blank\" rel=\"noreferrer noopener\">Thelander Monthly Digest here<\/a>.\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"<p>For our November Digest, we&#8217;re looking at&nbsp;committed capital and if&nbsp;you have to commit capital for your carried interest. First, we&nbsp;need to define what this means.&nbsp;Committed capital&nbsp;is the percentage that the General Partners (GPs) contribute to the overall capital of the fund.&nbsp; So, why is this important?&nbsp;It shows how much&nbsp;skin GPs have in the game&nbsp;by indicating&nbsp;the [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[5,3],"class_list":["post-280257","post","type-post","status-publish","format-standard","hentry","category-newsletter","tag-investment-firm","tag-newsletter"],"_links":{"self":[{"href":"https:\/\/brightturn.io\/index.php?rest_route=\/wp\/v2\/posts\/280257","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/brightturn.io\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/brightturn.io\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/brightturn.io\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/brightturn.io\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=280257"}],"version-history":[{"count":0,"href":"https:\/\/brightturn.io\/index.php?rest_route=\/wp\/v2\/posts\/280257\/revisions"}],"wp:attachment":[{"href":"https:\/\/brightturn.io\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=280257"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/brightturn.io\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=280257"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/brightturn.io\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=280257"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}