Carry benchmarks by fund size and strategy

Two bodies of evidence carry almost all of the defensible numbers in this domain. One is an industry association's periodic market-terms report, which surveys limited partners and general partners on what appears in fund agreements. The other is an academic study of fund economics built from a sample of fund agreements. They measure different things by different methods, and combining their figures into a single table would produce numbers with no common referent.

From the market-terms report: a twenty per cent carried interest rate at seventy-one per cent of sampled funds; an eight per cent preferred return at sixty-seven per cent; seventy-eight per cent of waterfalls accruing the preferred return on a compounded basis; sixteen per cent of funds carrying no hurdle at all; whole-fund waterfall prevalence at seventy-seven per cent in the rest of the world, seventy-three per cent in Europe and fifty-eight per cent in North America, with deal-by-deal and hybrid combined at twenty-three to forty-two per cent by region.

From the academic study: a carry basis equal to committed capital at ninety-two point one per cent of venture funds and eighty-three point two per cent of buyout funds; two per cent as the most common initial management fee level; a twenty-five basis point annual step-down as a worked exemplar; and about sixty per cent of a manager's expected revenue arising from fixed-revenue components rather than carry.

Everything else in this article is either a prescriptive standard — what a standard-setter says should happen, which is not the same as a measurement of what does — or a single drafting exemplar. Both are useful and neither is a benchmark. Keeping the three categories separate is the whole methodological content of the page.

Several of the numbers most often quoted as market are prescriptive rather than empirical. A thirty per cent carry escrow is the model agreement's requirement and the association's prescriptive position — it is what an institutional limited partner body says should happen, and the same sources describe market practice as reserve accounts representing roughly half of after-tax carry, which is a different quantity on a different base. A twenty per cent escrow appears as one jurisdiction's drafting exemplar. Three numbers, three statuses, one topic.

The catch-up rate behaves the same way. Eighty per cent is the rate in the model agreement itself; one hundred per cent is described as United States drafting practice. Neither is a measured distribution across funds, and no verified source reports one. A hundred and twenty-five per cent net asset value coverage appears as an illustrative floor in a prescriptive standard, introduced with an example marker rather than as an observed level.

The giveback cap — the lesser of thirty per cent of distributions received and twenty-five per cent of commitment — is a model agreement provision. So is the two-year giveback limitation period, and so is the two-year clawback repayment deadline. All three are contractual positions from a model document rather than measurements, and they should be cited that way.

The practical instruction is to attach the status to the number every time it is used. A figure quoted as market in a negotiation invites the counterparty to ask for the source, and the answer this is what the model agreement requires is a strong position while the answer this is what everyone does is one that collapses the moment anyone checks.

The question this page's title asks — what is market by fund size and by strategy — has no answer in any source verified for this domain. The market-terms report publishes distributions across its whole sample, with regional splits on the waterfall question and a single size-conditioned observation about non-standard waterfall provisions at the largest growth and buyout funds. It does not publish carry rates by fund size, preferred return rates by strategy, or escrow percentages by vintage.

The academic study splits its carry-basis figures between venture and buyout, which is the closest thing to a strategy cross-tabulation available here, and it is a single variable rather than a table. Nothing in either body of evidence supports a statement of the form a fund of this size and this strategy typically carries this term.

Compensation is the sharper version of the same gap. The pool exists, the points instrument is documented, the vesting schedule is disclosed to limited partners and may vary by seniority — and the allocation of points itself is sourced nowhere in this library. The surveys that would supply carry points by seniority and general partner compensation ranges were not retrieved, and the graph records the corresponding nodes as uncited for exactly that reason.

The temptation at this point is to fill the gap with a plausible range, and it is worth naming why that is the wrong move rather than simply declining. A benchmark published without a retrievable source becomes the source for the next publication, and the chain terminates in nothing. The whole value of a benchmark is that it can be checked. One that cannot be checked is not a weaker benchmark; it is a different kind of object wearing a benchmark's clothes.

One structural term is worth more attention than any benchmark on this page. A premium carry increases the carry percentage above baseline once performance thresholds are met. The market-terms report notes that waterfalls with increasing carried interest rates based on fund performance may be gaining popularity, with an example of twenty per cent rising to twenty-five per cent once investors achieve a twenty per cent internal rate of return or three times contributions.

The law-firm treatment distinguishes two forms and the distinction is load-bearing. A flat premium carry applies a higher rate from inception. An earned premium carry triggers a higher rate only on meeting thresholds, typically multiples in the two-to-three-times range, and the same source reports earned premium carry expanding. Premium carry is the headword with a law-firm citation behind it, so it is the one to use.

Negotiating priorities are also measured and they are useful for sequencing an argument. Key person ranked first at twenty-five per cent of respondents and the fee offset second at twenty per cent. Interim clawbacks are obtained by limited partners more than half the time in deal-by-deal structures and more than seventy-five per cent of the time in whole-fund structures. Those are outcomes rather than terms, and they are the closest thing available to evidence about what is winnable.

For carry vesting, four exemplar schedules are documented and the source is explicit that no clear market standard exists — including a back-end holdback of ten to twenty per cent running to dissolution. That absence is itself the finding, and it is more useful in a negotiation than a fabricated median would be.