Carry vesting
Last updated
Quick Answer
Carry vesting determines how much of an individual's allocated carried interest they keep if they leave the firm.1
What it is
Points are allocated at the management-company level and vest over an agreed period, often with a cliff before any portion is retained. Vesting may run on time, on the fund's own progress, or on a combination of both. What happens to vested and unvested points on departure is governed by the leaver provisions.1
Operational context
What good looks like
Why It Matters
Vesting decides what an individual keeps when they leave, so it is the term that determines whether allocated points are compensation or merely a statement of intent for as long as someone stays.1
Term Family
Related Questions
Browse all questions →Frequently Asked Questions
What is Carry vesting in venture capital?
Points are allocated at the management-company level and vest over an agreed period, often with a cliff before any portion is retained. Vesting may run on time, on the fund's own progress, or on a combination of both.
Why is Carry vesting important for startups?
Understanding Carry vesting is critical for founders navigating the fundraising process. It directly impacts deal terms, valuation, and the relationship between founders and investors.
Sources & References
- 1.morganlewis-carry-vesting — VC & PE Funds Deskbook — *Carried Interest: Vesting*VC & PE Funds Deskbook — *Carried Interest: Vesting*Morgan, Lewis & Bockius LLP(Carry vesting determines how much of an individual's allocated carried interest they keep if they leave the firm.)secondary · T2 · vesting-clawback · structure
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