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FOUNDER PLAYBOOK How Do VCs Actually Make Money?

@nicholewischoff

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Why it worked

The post breaks down a complex financial topic (how VCs make money) into easily digestible slides with clear visuals and concise text. This educational approach appeals to founders and entrepreneurs interested in venture capital, making it highly shareable and engaging within that niche.

Summary

This photo post explains how Venture Capitalists (VCs) make money through management fees and carry. It breaks down the math with examples, showing how a fund's growth can lead to profits for the VC.

Structure

1Introduction to the topic: How VCs make money.
2Explanation of Management Fee (2% of fund size).
3Explanation of Carry (20% of profits after returning capital).
4Mathematical example of fund growth and profit distribution.
5Concluding thought on the time it takes for profits.

Product placement

The video mentions "Rho" and "Wischoff Ventures" as presenters/entities involved, but does not promote a specific product or service for purchase. The content is educational about the venture capital industry.

On-screen text

FOUNDER PLAYBOOK How Do VCs Actually Make Money? Presented by Rho Management Fee Every year, the fund pays the VC 2% just to run it. Think of it like a salary. $2M per year on a $100M fund Covers salaries, rent, travel, etc... WISCHOFF VENTURES Carry If the fund makes money, the VC keeps 20% of the profits. Investors get the other 80%. But only AFTER returning every dollar to investors first. ANNUAL PARTNER MEETING 8 OCTOBER 2023 STIFFEL | FOUNDER PLAYBOOK The Math $100M fund grows to $300M. Return $100M to investors first. That leaves $200M in profit. $40M goes to you (20% of $200M) ...but this can take 7-10 years to see