Deal-by-deal vesting
Last updated
Quick Answer
Deal-by-deal vesting earns carried interest as individual investments are made or realized rather than on a calendar schedule.1
What it is
The individual vests in the carry attributable to the deals they were present for. It aligns entitlement with contribution more closely than a time schedule does, at the cost of considerably more administration and a more complex position when someone leaves partway through a fund's investment period.1
Operational context
What good looks like
Why It Matters
It aligns entitlement with the deals someone was actually present for, at the cost of considerably more administration and a much harder position to unwind when a person leaves mid-investment-period.1
Term Family
Related concepts
Frequently Asked Questions
What is Deal-by-deal vesting in venture capital?
The individual vests in the carry attributable to the deals they were present for. It aligns entitlement with contribution more closely than a time schedule does, at the cost of considerably more administration and a more complex position when someone leaves partway through a fund's investment...
Why is Deal-by-deal vesting important for startups?
Understanding Deal-by-deal 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(Deal-by-deal vesting earns carried interest as individual investments are made or realized rather than on a calendar schedule.)secondary · T2 · vesting-clawback · structure
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