Carry on realized vs unrealized gains
Last updated
Quick Answer
Carry on realized gains is computed only on investments actually exited; carry on unrealized gains includes the manager's own valuations of what it still holds.1,2
What it is
A realized-gains formulation pays carry only on proceeds actually received. An unrealized formulation allows carry to accrue against fair-value marks on the remaining portfolio. Because the unrealized portion rests on the manager's own valuation policy, the two produce different timing and different exposure to later reversals.1,2
Operational context
What good looks like
Why It Matters
Paying carry on marks is what creates the overpayment risk that clawback and escrow provisions exist to remediate.1
Term Family
Related concepts
Frequently Asked Questions
What is Carry on realized vs unrealized gains in venture capital?
A realized-gains formulation pays carry only on proceeds actually received. An unrealized formulation allows carry to accrue against fair-value marks on the remaining portfolio.
Why is Carry on realized vs unrealized gains important for startups?
Understanding Carry on realized vs unrealized gains is critical for founders navigating the fundraising process. It directly impacts deal terms, valuation, and the relationship between founders and investors.
Sources & References
- 1.ilpa-reporting-template-2 — ILPA Reporting Template v2.0 — Suggested Guidance (January 2025)ILPA Reporting Template v2.0 — Suggested Guidance (January 2025)ILPA(Carry on realized gains is computed only on investments actually exited; carry on unrealized gains includes the manager's own valuations of what it still holds.)primary · T1 · carry-mechanics · term
- 2.ilpa-reporting-template-hub — ILPA Reporting Template hubILPA Reporting Template hubILPA(Carry on realized gains is computed only on investments actually exited; carry on unrealized gains includes the manager's own valuations of what it still holds.)primary · T1 · carry-mechanics · term
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