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Offset percentage

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Quick Answer

The offset percentage is the share of portfolio-company fees credited against the management fee, and the authoritative answer is 100%.1

What it is

The range published almost everywhere is "typically 80% to 100%". Every authoritative source points to a full offset: ILPA's prescriptive principles and its empirical survey of market terms both state 100%. An 80% offset is legacy or off-market, and quoting the range as though both ends were equally standard understates what a limited partner should be asking for.1,2

Operational context

What good looks like

Why It Matters

This is one of three claims the market most reliably states the wrong way round, and it is worth money in a negotiation.1

Term Family

Related concepts

Management fee offset

Related Questions

What do offset fees mean?

A management fee offset credits fees the manager receives from portfolio companies — monitoring, transaction, directors' and similar fees — against the management fee the fund pays, so the same work is not paid for twice.

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Frequently Asked Questions

What is Offset percentage in venture capital?

The range published almost everywhere is "typically 80% to 100%". Every authoritative source points to a full offset: ILPA's prescriptive principles and its empirical survey of market terms both state 100%.

Why is Offset percentage important for startups?

Understanding Offset percentage is critical for founders navigating the fundraising process. It directly impacts deal terms, valuation, and the relationship between founders and investors.

Sources & References

  1. 1.ilpa-principles-3 — ILPA Private Equity Principles 3.0 (2019)ILPA Private Equity Principles 3.0 (2019)ILPA(The offset percentage is the share of portfolio-company fees credited against the management fee, and the authoritative answer is 100%.)primary · T1 · fees-economics · benchmark
  2. 2.ilpa-fund-terms-2021 — Industry Intelligence Report — "What's Market in Fund Terms?" (2021)Industry Intelligence Report — "What's Market in Fund Terms?" (2021)ILPA(The offset percentage is the share of portfolio-company fees credited against the management fee, and the authoritative answer is 100%.)primary · T1 · fees-economics · benchmark

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