Management Fee
Financial Mechanisms
In Short
The management fee is a recurring fee, typically 1.5-2% of committed capital annually, paid by a fund's investors to the manager. It covers the fund's operational costs, such as salaries, deal sourcing, and portfolio company support, regardless of performance.
detailed Definition
The management fee is an annual fee paid by the fund to the general partner (GP) for managing the fund’s operations, sourcing deals, conducting due diligence, and supporting portfolio companies. It is typically calculated as a percentage (e.g., 1.5–2%) of committed or invested capital and paid regardless of fund performance. The fee usually decreases as the fund matures and enters its harvesting phase.
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