Carry basis
Last updated
Quick Answer
Carry basis is the measure of capital or profit the carried interest percentage is applied to.1
What it is
The basis determines what the carry percentage multiplies. It governs whether profit is measured against committed capital or only capital actually invested, and whether fees and expenses are deducted before the carry calculation. Two funds with the same carry level and different bases produce materially different payouts.1
Operational context
What good looks like
Why It Matters
The basis is where the money is, and it attracts far less negotiating attention than the rate that sits in the headline.1
Term Family
Frequently Asked Questions
What is Carry basis in venture capital?
The basis determines what the carry percentage multiplies. It governs whether profit is measured against committed capital or only capital actually invested, and whether fees and expenses are deducted before the carry calculation.
Why is Carry basis important for startups?
Understanding Carry basis is critical for founders navigating the fundraising process. It directly impacts deal terms, valuation, and the relationship between founders and investors.
Sources & References
- 1.metrick-yasuda — Metrick & Yasuda, *The Economics of Private Equity Funds* (Rev. Fin. Stud. 2010)Metrick & Yasuda, *The Economics of Private Equity Funds* (Rev. Fin. Stud. 2010)Wharton / Rodney White Center(Carry basis is the measure of capital or profit the carried interest percentage is applied to.)secondary · T2 · carry-mechanics · term
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